Between 2004 and 2008, Chevron loaned itself $2.45 billion from Delaware.

The
money was borrowed in Delaware at 1.2% and lent to its Australian subsidiary at
interest rates above 8%.47 The Chevron Finance Corporation loaned the money
to Chevron Australia Holdings Pty Ltd as an unsecured loan in Australian dollars,
which allowed Chevron Finance Corporation to increase the interest rate to the
Australian bank bill rate plus a 4.14% margin.48 So the interest rate paid from
the Australian company to its US subsidiary was 8.2% in 2004 and by 2008 was
11.2%.49 The interest deductions paid from Chevron Australia to Chevron
Finance Corporation were not taxable in the US,
because Chevron Finance Corporation was a subsidiary of Chevron Australia.50
From 2004 to 2008 Chevron Finance Corporation earned profits of $1.1 billion
from the loan, which it paid as dividends back to Chevron Australia, which it
didnt pay tax on either, under the USAustralia tax treaty. The ATO stated
Chevron had used the loans and related-party payments to cut its taxes paid in
Australia by $258 million.
Chevron Australia has a debt-to-equity ratio of 76.2% almost 10 times the 8.5%
ratio of Chevron Corporation.
Chevrons interest rates to its Australian subsidiaries to itself from other parts of
Chevron located overseas could divert profits from Australia to Delaware and
offset future tax revenue by more than $35 billion.
(sub018 pdf )
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Chevron and the ATO, a company merger and restructure reduced the paid up
capital of Chevron Australia Pty Ltd from over $3 billion to only $29 million with
the shortfall made up by $US2.5 billion loan from another Chevron subsidiary.
Central to the proceedings is a credit facility agreement between Chevron
Australia and Chevron Texaco Funding Corporation under which it was agreed
to make advances through a Credit Facility Agreement in aggregate of $2.5billion.
However, these firms have large investments and are highly capital intensive
allowing them to take advantage of aspects of the thin capitalisation rules and
undertake debt loading. Chevron is involved in the exploration and production
of oil and gas in Australia including the massive Gorgon natural gas project off
North-Western Australia. Chevron has already had settlements with the ATO
over the level of debt, or more precisely, the amount of interest it wishes to deduct
from its revenues. In 2014 Chevron had an interest expense equal to over 62.5%
of its sales revenues and 45% in 2013. It increased the amount of the interest
expense by another two per cent through a process called accretion . At the end
of the 2014 financial year, Chevron was carrying a debt-to-equity ratio of over
4:1. Most, if not all of this debt was provided by associated entities. While these
arrangements might not breach the thin capitalisation rules, the conditions of the
loans may have breached the arms length principles. Chevrons financial
statements also revealed very large amounts of unrecognised tax losses that they
have carried forward. These losses can be used to offset future taxable income.
http://cdn.getup.org.au/1507-Aggressive-Tax-Avoidance-By-Top-Foreign-
Multinations.pdf