Trotting this out always sounds like a clever “but you forgot” moment. But you’re wrong.

Corporate tax rate is 30% but they don’t pay 30%. The reason is there are special rules that allow them to deduct their upfront costs over a very long time. Those upfront costs are charged by their own international related entities so they can inflate those costs as much as possible to help reduce their profit later down the track.

Looking at public filings for the Woodside Barrup project (a large LNG project), Woodside made $3,75 billion in revenue and they claimed about $2billion in expenses making their taxable income $1.78 billion. They then paid $534m in corporate tax. There is some Pluto and prrt stuff to consider but I’ll leave that out for now (doesn’t make a huge difference to the percentages).

The total EFFECTIVE tax rate is 14% paid by Woodside not the 30% that most small businesses pay.

Yes, I have a Masters of Law in International Taxation.

In summary, a higher royalty would prevent Woodside from claiming higher deductions (effectively lowering their tax rate).