Taxes are a vital source of revenue for countries around the world and help to fund essential services like education, health care and transport. In times of crisis such as the COVID-19 pandemic, taxes are also central to government policies to support people’s lives and livelihoods.
Being transparent is about showing how developing energy resources responsibly provides governments with an opportunity to generate revenues, support economic growth and enhance social development.
Shell publishes a Tax Contribution Report annually which sets out the corporate income tax that Shell companies paid in countries and locations around the world where Shell companies have a taxable presence. You can read our latest report here.
The Tax Contribution Report builds on the information we disclose in our Annual Report and Accounts, Form 20-F, the Sustainability Report and the Payments to Governments Report.
The report shows how our business activities are taxed globally. It outlines Shell’s approach to tax which is centred on compliance, transparency and open dialogue. Compliance is embedded in our Shell General Business Principles and the Code of Conduct. We do not condone, encourage or support tax evasion. In the report, we share information about our use of tax incentives and where we operate and why.
Overview of tax and other payments to governments
Taxes paid and collected
Other payments to governments
In 2020, Shell paid more than $47.3 billion to governments. We paid $3.4 billion in corporate income taxes, $3.5 billion in government royalties and collected $40.4 billion in excise duties, sales taxes and similar levies on our fuel and other products on behalf of governments.
Incentives and low-tax jurisdictions
Governments use tax incentives to encourage investment in their country. Shell uses available and appropriate tax incentives where we have a qualifying business activity.
For example, in Poland, the government has designated zones to accelerate economic development. We created jobs in one of these economic development zones in Krakow and as a result qualify for tax incentives that partially exempt us from paying corporate income tax.
Governments sometimes set low corporate income tax rates to attract investment. When we are present in low-tax jurisdictions, we are there for commercial reasons. We do not use these locations to avoid taxation on activities that take place elsewhere.
In 2019, we launched a review of parts of our corporate structure against our Shell Responsible Tax Principles, which have been developed with the non-profit organisation, The B Team, and which guide our decisions on tax matters.
We frequently review our corporate and financing structures to ensure these remain consistent with our policies and principles. This has led to the liquidation and restructuring of some entities that were in low- or zero-tax jurisdictions. For example, in 2019, we ended our financing activities from Switzerland to some Shell operating companies and, in 2020, we ceased our lending activities in Bermuda.