Exxon sues EU to evade windfall tax on oil profits
US-based ExxonMobil is suing the EU in an attempt to prevent Brussels for levying windfall taxation on oil profits. The oil major claims that the EU lacks legal jurisdiction to impose the measure, reports Bloomberg News.
This lawsuit can be seen as the oil and gas industry’s retaliation against the EU’s policy designed to gather revenue from huge profits gleaned during wartime as Western governments have tried to find ways to reduce towering energy costs for consumers resulting from Russia’s invasion of Ukraine.
EU Commission President Ursula von der Leyen announced the plan back in September, asserting that oil and gas majors should pay a ”solidarity contribution” on account of skyrocketing bottom-line results during 2022.
A taxation level of 33% for annual oil profits was later revealed by the EU – a level more than 20% higher than yearly averages from 2019 to 2021.
The Commission, news agency AFP reports, has carefully avoided using the term ’tax’.
”Tax will undermine investor confidence”
Exxon informs that the lawsuit is being brought before the Court of Justice of the European Union in Luxembourg by the group’s Dutch and German subsidiaries.
Casey Norton, spokesperson for Exxon, claims in a statement that the contribution will ”undermine investor confidence, discourage investment, and increase reliance on imported energy and fuel products.”
”We recognize that the energy crisis in Europe is weighing heavily on families and businesses, and we’ve been working to increase energy supplies to Europe. Our challenge is targeted only at the counter-productive windfall profits tax, and not any other elements of the package to reduce energy prices,” Norton comments.
ExxonMobil Chief Financial Officer Kathy Mikells recently said that such tax could cost the oil outfit at least USD 2bn ahead to late 2023, Bloomberg writes.
The Texas-based supermajor, now headed toward closing its most lucrative year to date, was recently added back to the S&P 500 index.
For the third quarter of this year, Exxon booked its highest interim profit in the company’s 152-year history owing to surging prices of natural gas.
The group’s Q3’22 post-tax profit soared to USD 19.7bn, thus exceeding the company’s hitherto interim record of USD 17.6bn from the second quarter of this year.
US President Joe Biden has also mentioned introducing a windfall tax on oil companies in response to what he has called ”war profiteering”, however, the US has not imposed such a mechanism.
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