Shell’s tax-free days in the Bahamas are numbered
Companies like Shell have long exploited tax shelters to further profits but as global tax pressure increases, the advantageous rates tax havens offer will come under pressure
Shell achieved excellent returns employing just 35 people in Nassau. Its staff worldwide numbers 87,000.
Oil trading is a very profitable business. If you manage to pay no taxes on it and can work from a Caribbean beach, well, then it’s corporate heaven.
Royal Dutch Shell Plc, Europe’s largest energy company by market value, has managed to tick all the boxes: It has a very profitable trading subsidiary, which pays not a single cent in taxes, in Nassau, the capital of the Bahamas. The little-known entity is called Shell Western Supply and Trading Ltd., a trading outfit dealing in crude from West African and Latin American countries. It’s a cog in the huge trading operation inside Shell that many shareholders pay little attention to.
According to its latest annual tax contribution report, released last month, Shell’s Bahamas subsidiary generated more than $652 million in profits in 2020, making the Caribbean country its 5th most profitable operation globally. More remarkably, Shell achieved excellent returns employing just 35 people in Nassau. Its staff worldwide numbers 87,000.
The year 2020 wasn’t an anomaly. During the 2018 to 2020 period, the oil major made almost $2.5 billion in profits with the Bahamas subsidiary — a staggering 14% of the parent company’s total net income over those three years.
The tax regimen is completely legal under Bahamian law. And Shell executives offer a lengthy list of “commercial” reasons why it makes sense the subsidiary should be based in the Caribbean nation.
Javier Blas is a Bloomberg Opinion columnist covering energy and commodities. He previously was commodities editor at the Financial Times and is the coauthor of “The World for Sale: Money, Power, and the Traders Who Barter the Earth’s Resources.”
Disclaimer: This article first appeared on Foreign Policy, and is published by special syndication arrangement.
Shell’s tax-free days in the Bahamas are numbered was first posted on January 15, 2022 at 1:10 pm.
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