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The royalty rate is on production, not profits. The government takes 12.5% of all produced oil and has the right to the revenues. This is a much more burdensome
by infra_ 4y ago
The royalty rate is on production, not profits. The government takes 12.5% of all produced oil and has the right to the revenues. This is a much more burdensome tax than a tax on profits in that the government gets paid before the oil company, even if the oil company loses money on their investments. That’s why it’s not taxed at standard corporate tax rates.
- account42 4y agoDoes the average oil company lose money on their investments?
- infra_ 4y agoYes, quite often. https://www.haynesboone.com/-/media/project/haynesboone/haynesboone/pdfs/energy_bankruptcy_reports/oil_patch_bankruptcy_monitor.pdf?rev=e57d3129b7504ea190df5d33dbacae44&hash=F461E4FE13446BE821B8AE9080C349E6 https://www.haynesboone.com/-/media/project/haynesboone/hayn... https://www.forbes.com/sites/christopherhelman/2021/02/02/exxonmobil-caps-year-from-hell-with-22-billion-loss-as-activists-demand-big-change/ https://www.forbes.com/sites/christopherhelman/2021/02/02/ex...