This week in tax: Shell’s profits spark tax calls

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

This week in tax: Shell’s profits spark tax calls

marc-rentschler-shell-tax.jpg

Shell reports profits of £32.2 billion, prompting calls for higher taxes on energy companies, while the IMF warns Australia to raise taxes to sustain public spending.

Shell made a record global profit of £32.2 billion ($39.9 billion) in 2022 – almost double the figure from 2021 – according to the company’s annual report published yesterday, February 2.

The British energy company reported paying $13 billion in tax worldwide in 2022. This included $134 million paid in UK windfall tax and $520 million to the EU in solidarity contributions. However, the company expects to pay $500 million this year in the UK as the energy profits levy increased in January.

The combination of corporate tax and the energy profits levy means the company will face a combined headline rate of 75% this year. This is up from 65% in 2022, due to the rise in the energy profits levy from 25% to 35% in January. That levy is set to run until 2028.

Nevertheless, there are calls for higher taxes because the headline rates are the most a business will pay and not necessarily what a company has to pay under the law.

IMF warns Australia it may have to raise taxes

The IMF warned the Australian government that it may have to increase taxes to cover its level of public spending, yesterday, February 2.

So far Prime Minister Anthony Albanese has avoided raising taxes, but he may have to accept tax reform sooner or later. This could cost him politically because he pledged not to boost taxes.

The IMF has recommended such options as increasing the goods and services tax, ending the capital gains tax exemption on house sales, replacing stamp duty with land taxes, and cancelling the income tax cuts for high-income earners scheduled for July 2024.

Albanese inherited ‘stage three’ income tax reductions from his Liberal predecessor Scott Morrison. These personal tax changes will be costly to the government, but the Labor Party pledged not to reverse them during the 2022 election campaign.

The Australian economy may avoid a recession this year, but the IMF still argues that the spending plans baked into the budget will require an overhaul of the country’s tax system.

India keeps to tax strategy ahead of elections

The Indian government announced its last union budget before the 2024 general election on Wednesday, February 1, but its strategy is to steer a steady course on tax policy.

Finance Minister Nirmala Sitharaman took a cautious approach in the 2023-24 budget with incentives to promote capital investment as the economy continues its recovery from the COVID-19 pandemic.

Prime Minister Narendra Modi may have presided over the introduction of the goods and services tax and a historic corporate tax cut, but his government does not want to risk spooking financial markets before an election.

The Modi government is also extending the 15% tax rate benefit to new cooperatives in manufacturing until March 31 2024, as well as keeping the tax exemption for start-ups until April 1 2024.

Meanwhile, the government is continuing the capital gains exemption on the transfer of Indian securities until March 31 2025. Foreign funds relocating to India can gain this exemption, as well as their investors.

Next week in ITR

ITR will be following Brazil’s transfer pricing reform in close detail as the legislative process ramps up. The National Congress has just 120 days to debate and decide the future of the proposal to re-introduce the arm’s-length principle.

We will also be interviewing Karl Berlin, tax director at Danish energy company Ørsted, on his company’s recent Fair Tax accreditation and what it means for other businesses around the world.

Readers can expect these stories and plenty more next week. Don’t miss out on the key developments. Sign up for a free trial to ITR.

more across site & shared bottom lb ros

More from across our site

If the Reform leader becomes UK prime minister then he may follow the direction of the US in at least one significant way
Trump declared a new national emergency in issuing the order; in other news, Grant Thornton Germany is up for sale and the subject of interest from both its UK and US counterparts
The judgment, which saw Denmark's Supreme Court rely on OECD TP guidance, sets aside more than 15 years of consistent administrative practice, experts have told ITR
Belgium’s new coalition government has gone ahead with a new exit tax regime that could land it in the courts
Brazil’s government has not officially framed the bill as a countermeasure amid trade tensions with the US, but the move is being considered as part of Brazil’s strategic response, one expert tells ITR
Understanding India’s income tax landscape can help charities ensure compliance, optimise tax benefits, and enhance their impact, writes Raghav Bajaj of Khaitan & Co
Tax advisers in Brazil are rising above the country’s notoriously complex tax system to deliver high-quality advisory services, ITR’s exclusive in-house data reveals
ITR’s data has highlighted the US firm’s ambition to become America’s ‘premier’ tax player via a concerted partner recruitment strategy
Jaap Zwaan’s arrival continues a recent streak of A&M Tax investing in the region; in other news, the US and Japan struck a deal that significantly lowered tariff rates
In a world where international tax concepts rely on human activity, Leonard Wagenaar poses existential questions about the future of such ideas when AI is ever-present
Gift this article