Allocation of costs
Shell’s centralised services and business service centres charge fees for services that provide a benefit for the receiving entities and which these entities would have been willing to pay a third party to provide. Shell’s operating companies using centralised services pay a fee, which is based on the actual cost of providing the services.
The costs of these services are incurred in direct support of Group business activities and need to be fairly charged to the entities benefiting from the services. All Group entities should bear their fair share of the costs. Costs are not excessively charged to entities in higher-tax jurisdictions where they could be deducted and used to manipulate taxable profit to a lower level.
In cases where there is just one recipient of a service, the entity pays a direct fee for the service it has received based on the actual cost of the service. However, if there are different entities receiving the same service, they share the cost. Their share is allocated proportionately based on an appropriate measure of the usage of the service, for example capital and operating expenditure, staff employed or orders processed.
Shell’s service cost allocation system, including the proportionate allocation of costs, is set up and operated in accordance with the guidance provided by the OECD.
Business service centres
Our businesses are supported by business service centres around the world. The choice of location for these centres is based on available expertise and costs which compare favourably with alternative outsourcing solutions.
The centres provide significant employment opportunities with 18,000 staff worldwide. Some of their activities benefit from local tax exemptions where, for example, certain employment levels are met.
Information technology (IT) provides capabilities that improve the way we do business. IT services are centralised in India and Malaysia.
Human resources focuses on reviewing, monitoring and guiding the business processes and systems that affect our employees, such as staff recruitment, on-boarding, retention and motivation. Human resources services are centralised in Poland, Malaysia and the Philippines.
Legal provides expert advice on the activities of the businesses and functions. Legal services are centralised in Poland and Malaysia.
Finance and data operations
Finance and Data Operations provides the businesses with access to reliable data and analysis of their financial profiles and performance, as well as accounting, tax return and billing services. Finance and Data Operations are centralised in Poland, the Philippines and India.