Shell pays UK taxes for the first time in five years

Shell is paying taxes in the UK for the first time since 2017 as it poised to make record profits.

The energy company expects to make about $2bn (£1.7bn) in profits in the UK and the European Union.

This will be in addition to $360 million based on financials for the three months ended October 2022. A detailed breakdown of taxes paid will be released next month, the company said.

Shell received tax credits for investments made in the British North Sea areas and for the decommissioning of oil rigs in excess of taxes due, meaning nothing was paid.

Last year, the UK government, along with the governments of several European countries, introduced windfall taxes on energy companies in an attempt to use some of the huge profits that companies made from high oil and gas prices to support consumers.

Chancellor Jeremy Hunt said in a November statement that the energy industry would be subject to an increased 35 percent contingency tax. The levy, which expires in March 2028, is expected to generate more than $33 billion over the next six years.

Former Shell CEO Ben van Burden publicly suggested that the government tax oil and gas companies to protect the poorest.

Speaking of energy companies, he said: “This could probably mean that governments have to tax the people in this space to pay for this. I think as a society we just have to accept that it can be smart and not so smart. There is some debate about this, but I think it’s inevitable.”

Earlier this year, Van Beurden was replaced by Wael Sawan, who previously headed the company’s gas and renewable energy division.

The European Commission initially announced it would receive 25 billion euros from an additional oil tax introduced in September, but is now facing legal action from US oil company ExxonMobil.

Analysts say Shell could make a £30bn profit in 2022.

Shell said it would increase dividends to shareholders by 15 percent. Profits from the gas business were “significantly higher” despite serious production problems at two plants in Australia.

The company also reported higher refining profit margins in its chemicals and fuels divisions over the last three months of 2022, but said its petroleum products trading profit was lower than the previous quarter.

Shell’s profit comes as automakers accuse retailers, including major supermarkets, of not cutting prices fast enough or by a reasonable amount when wholesale prices are cut. Fuel prices in the UK are under scrutiny by the Competition and Markets Authority after record prices last summer.