"Unfair Imposition of Windfall Tax"… US ExxonMobil Files Complaint with EU
Opposition to EU Windfall Tax Introduction
"Undermines Corporate Investment Motivation and Increases Import Dependence"
[Asia Economy Reporter Kwon Haeyoung] US oil giant ExxonMobil has filed a lawsuit against the European Union (EU) in response to the introduction of a 'windfall tax' on excess profits of energy companies. The controversy over the windfall tax has intensified as global energy prices have soared due to the Ukraine war.
On the 28th (local time), according to the Financial Times (FT), ExxonMobil claimed that the EU's imposition of the windfall tax exceeded its legal authority and filed a lawsuit at the EU General Court in Luxembourg through its subsidiaries in China and Germany.
Earlier, the EU announced in September that it would push forward legislation to collect a windfall tax from energy companies. The core of the bill is to impose a tax of at least 33% if the profits of gas and oil companies this year and next year exceed the average profits of the past three years by more than 20%. Energy companies, including ExxonMobil, have strongly opposed this bill, which is set to take effect from the end of the year.
In filing the lawsuit against the EU, ExxonMobil argued that the windfall tax cannot be a solution to the energy crisis and that it was unfair to exercise emergency powers through majority voting rather than unanimous consent when introducing the windfall tax.
ExxonMobil spokesperson Kathy Norton stated, "While rising energy prices do burden households and businesses, imposing a windfall tax produces adverse effects," adding, "It undermines investor confidence, dampens corporate investment incentives, and could increase dependence on energy imports."
ExxonMobil also highlighted that it has invested $3 billion (approximately 3.8 trillion KRW) over the past decade in EU refining projects to increase production. Norton emphasized, "ExxonMobil was considering investing billions of euros in Europe in the coming decades," and added, "Whether future investments proceed depends on how attractive and globally competitive Europe is."
ExxonMobil estimated that the tax burden from the windfall tax could reach $2 billion (approximately 2.5 trillion KRW) by the end of 2023. The company posted record profits of $20 billion (approximately 26 trillion KRW) in the third quarter alone.
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The heated discussion over the introduction of the windfall tax stems from the sharp rise in global energy prices due to the Ukraine war. While energy companies have made astronomical profits, the difficulties faced by ordinary citizens and vulnerable groups have worsened. Consequently, governments around the world are increasingly considering the windfall tax. Germany, the UK, Italy, and others have raised tax rates on energy companies. At the EU member state level, the windfall tax is being introduced to secure an additional 140 billion euros (approximately 189 trillion KRW) in tax revenue, which will be used to alleviate the burdens on energy-vulnerable groups. Even the US, swept by neoliberalism, has seen President Joe Biden describe the profits of energy companies as "windfalls from the Ukraine war," hinting at the possibility of imposing a windfall tax.
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