”Show us your tax, Shell”

There is not one drop of oil coming out of the Swiss mountains, but still Royal Dutch Shell has eight subsidiaries in Switzerland. Between 2001 and 2005 the Dutch-British oil multinational set up a range of subsidiaries in the country, although these entities are not involved in any productive activities, finds a new report released today. The Centre for Research on Multinational Companies (SOMO) and Friends of the Earth Europe report concludes that Shell uses Switzerland mainly for ‘tax planning purposes’.

Shell’s presence in Switzerland potentially allows the company to avoid paying a significant amount of taxes where its actual economic activities take place, including in developing countries.

The Swiss Connection

Leader in transparency

Shell claims to be a leader in tax transparency. SOMO and Friends of the Earth Europe however found that there is no transparency on the taxes that Shell pays in Switzerland, nor does Switzerland require that company accounts are made available on public record. In response to the findings in the report, Shell did not provide any specific information about their tax payments in Switzerland, nor were any specific questions on their business activities in that country answered.

Fair tax

“Despite Shell’s claims to operate transparently there is still no public information about its activities in Switzerland and other tax havens. This makes it impossible to establish whether Shell pays its fair share of tax”, states SOMO-researcher Mark van Dorp. SOMO and Friends of the Earth Europe call on Shell to give full disclosure of its financial data including tax payments in all countries where Shell is present. This is in anticipation of EU legislation obliging companies to provide so-called ‘country–by-country’ reporting as of January 1st 2016.

“Our research shows a major multinational company with billions of dollars of revenue from operations in developing countries operating secretively in Switzerland with little apparent purpose other than to move revenue away from jurisdictions where it would be taxed. With billions being lost from government budgets every year due to tax avoidance it’s urgent that Shell and other oil companies make public all their accounts, all their payments to governments and stop avoiding tax,” said Paul de Clerk of Friends of the Earth Europe.

Secrecy

At least since 2001, Shell may have been using Switzerland for tax purposes. In 2005 for example, the company shifted ownership of its brands and trademarks to a Swiss-based subsidiary, Shell Brands International AG. This company is registered in the canton of Zug, a very popular location for multinational corporations.

Shell benefits here from particularly low income tax rates for foreign companies, from the country’s extensive network of double taxation treaties and from Switzerland’s secrecy regulations.

SOMO and Friends of the Earth Europe were not able to obtain information on the amount of taxes paid in Switzerland and therefore could not calculate the amounts potentially avoided in countries where the actual production takes place, including developing countries. These countries often depend on foreign aid and dearly need the tax revenues to provide citizens with basic services like education and health care.

The findings of this report support the call(opens in new window) by the Tax Justice Network Netherlands earlier this week for Shell to be truly transparent about their tax payments to governments.