US Senator to Propose Bill Ending Overseas Tax Breaks as Chevron, Exxon Profit Surge
US Senator Martin Heinrich will introduce legislation to end tax benefits for American oil and gas companies operating overseas. The bill would tax foreign fossil fuel profits like other foreign business income, close loopholes, and prevent misclassification of payments to foreign governments. It comes as Chevron reported a $12 billion net profit, up nearly 400% year on year, and ExxonMobil reported $14.5 billion, more than double, in the second quarter, driven by oil price surges from the Iran conflict.
US Senator Martin Heinrich will introduce a bill to end tax benefits enjoyed by American oil and gas companies for overseas operations. Heinrich, the ranking Democrat on the Senate Energy and Natural Resources Committee, said the current tax policy effectively encourages oil majors to produce energy abroad, and the bill would ensure US energy development competes on a level playing field with development in the Middle East or other regions.
The legislation would eliminate preferential tax treatment for income from overseas oil and gas extraction, making foreign fossil fuel profits subject to the same taxation as other foreign business income. It would also close a loophole that allows companies to include shale oil and oil sands development in consolidated foreign oil and gas income to generate additional foreign tax credits.
The bill would further amend foreign tax credit rules to prevent oil and gas companies from misclassifying payments to foreign governments as taxes rather than royalties, thereby reducing their US tax liabilities. Heinrich said that with oil majors earning billions of dollars each quarter, they are fully capable of paying their fair share of taxes.
Earlier, President Trump criticized major US oil and gas producers for "making too much money" while Iran conflict-driven gasoline price increases were in effect, and warned companies such as ExxonMobil and Chevron that they must "return some of their profits to the public" by lowering retail prices. Meanwhile, Trump has pushed US oil and gas companies to invest in Venezuela.
Last week, major global oil and gas companies reported second-quarter results, with profits surging on the back of crude price spikes caused by the Iran conflict. Chevron's net profit reached $12 billion, up nearly 400% from $2.5 billion in the same period a year earlier. ExxonMobil reported profit of $14.5 billion, more than double the roughly $7.1 billion a year earlier. AAA data showed US gasoline prices at $4.06 per gallon on Thursday, an important source of voter discontent ahead of the midterm elections.