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Corporate income tax

In 2022, Shell reported pre-tax income of $64.8 billion, compared with $30 billion in 2021, and paid $13.1 billion [A] in corporate income taxes. We reported a corporate income tax charge of $21.9 billion for 2022.

Our effective tax rate (ETR) is calculated by dividing the corporate income tax charge of $21.9 billion by the total income before taxation of $64.8 billion, resulting in an ETR of 33.8% for 2022. For comparison, in 2022 the average corporate income tax rate levied by the 38 countries that were members of the OECD was 23.6% [B]. Our ETR is typically higher than the average corporate income tax rate in OECD countries, partly because many governments apply a higher corporate income tax rate to profits made by oil and gas production activities. In some cases, this corporate income tax rate can be more than 80%. Our ETR is a blend of the different statutory tax rates and the different corporate income tax laws applied to our various businesses.

[A] In 2022, we paid $13.1 billion in corporate income taxes and accrued $0.3 billion of withholding taxes. This gives a total of $13.4 billion in corporate income taxes and withholding taxes  reported as corporate income tax paid in our country-by-country report.
[B] OECD (2023), Corporate Income Tax: Corporate income tax rates (Edition 2022), OECD Tax Statistics (database).

Corporate income tax reconciliation

The chart below provides a reconciliation between our 2022 corporate income tax charge of $21.9 billion and the corporate income tax we paid of $13.1 billion as per our Annual Report and Accounts 2022.

2022 corporate income tax reconciliation

$ million

05,00010,00015,00020,00025,000Corporateincometax paid [A]Phasing of taxpaymentsCurrenttax chargeDeferredtaxCorporateincometax chargeTotalReconciling differenceababaab21,94115,43613,120(6,505)(2,317)

[A] We also accrued $0.3 billion of withholding taxes. This amounts to $13.4 billion, which is reported as corporate income tax paid in our Payments overview.

The corporate income tax charge consists of the current tax charge plus the deferred tax charge. Deferred tax arises when there is a timing difference between the tax and accounting treatment of an asset or liability shown on the balance sheet. For example, decommissioning costs are accrued for accounting purposes over several years; however, they may not be tax deductible until the decommissioning costs have been paid. Deferred tax can, therefore, smooth out large differences in the tax charge over a number of years. 

The current tax charge consists of the corporate income tax accrued on our 2022 taxable profits, as well as adjustments to the current tax charge accrued in previous years. The current tax charge for a given year is on an accruals basis for accounting purposes, whereas corporate income taxes are paid in accordance with the relevant tax legislation, resulting in some taxes being paid in-year, and some after year end. For example, in Nigeria, petroleum profit taxes need to be paid in monthly instalments on the basis of estimates, starting in March of the current year and ending in February of the following year, followed by a final payment (or refund) when the tax return is filed in May.

The difference between the current tax charge and corporate income taxes paid is therefore a result of the phasing of tax payments across several years.

Read more in Our tax data and in Annual Report and Accounts 2022(

Corporate income tax
This is a direct tax imposed on companies’ profits. It is sometimes levied at a national level but can also be levied on a state or local basis.
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Corporate income tax accrued
This is the amount of corporate income tax for 2022 recorded as current-year tax in Shell’s Consolidated Statement of Income. This also includes withholding tax accrued. It does not include prior-year adjustments, deferred tax or provisions for uncertain tax liabilities.
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Corporate income tax paid
This comprises corporate income tax paid in 2022, as recorded in Shell's Consolidated Statement of Cash Flows, and includes accrued withholding taxes on dividend, interest and royalty payments to Shell entities. In some cases, this may include payments made in relation to previous years or future years as tax payments are often made in arrears or in advance. It does not include withholding taxes collected by Shell on dividends paid to shareholders. Nor does it include corporate income tax paid by non-consolidated joint ventures and associates.
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Country-by-country reporting (CbCR)
Country-by-country reporting was introduced for all large multinational enterprises (MNE) as part of the OECD BEPS project. The report should disclose aggregate data on income, profit, taxes paid and economic activity among tax jurisdictions in which the MNE operates. The report is filed with the main tax authority (typically the tax authority in the country in which the MNE has its head office) which can share it with tax authorities in other countries.
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Effective tax rate (ETR)
This is the ratio of tax compared with the profits in the financial statements.
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Organisation for Economic Co-operation and Development (OECD)
The OECD is an intergovernmental economic organisation with 38 member countries, founded in 1961 to stimulate economic progress and world trade.
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Statutory tax rate
This is the tax rate imposed by law in a country.
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Tax charge
The aggregate of current tax and deferred tax included in the determination of profit or loss for the period in our Annual Report and Accounts.
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Withholding taxes
A withholding tax is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. Withholding taxes usually apply to royalties, interest or dividends.
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