The purpose of Eni’s tax strategy is to determine a fair amount of taxes due in each jurisdiction in which we operate and to minimize the risks of tax disputes. Eni is fully compliant with the tax rules currently in force, with the aim of avoiding the risk of double taxation of earnings, both economic and jurisdictional. We pay taxes on profits from our hydrocarbon exploration, development and production activities in the Countries which own the reserves, in accordance with each Country’s contractual and fiscal regime. The fact that our subsidiaries in the Exploration & Production segment are, in most cases, incorporated in Countries other than the ones in which we are conducting Oil&Gas activities responds to organizational and corporate purposes and does not affect the level of taxation borne in each Country of operations.
Determining a fair amount of taxes due in each jurisdiction in which we operate and minimizing the risks of tax disputes are the purposes of Eni’s tax strategy.
We incur substantial amounts of corporate income taxes, royalties, production taxes and other items connected to our exploration & production activities. Historically, the tax rate in our upstream segment has been around 60%; in the two-year period 2015-2016, due to a weak commodity price environment, our upstream tax rate rose to approximately 80%. Eni does not make use of organizational structures lacking industrial rationale in order to obtain tax advantages, nor do we incorporate our subsidiaries in Countries, which do not adhere to international protocols on tax transparency (the so called tax heavens). As part of its general tax policy, Eni does not incorporate any subsidiary in Countries, which are designated tax heavens under the Italian tax code.
Our presence in tax heavens is limited to few subsidiaries of our Exploration & Production sector, which have been acquired in the past following business combinations and other corporate acquisitions. The taxable income of such entities is immaterial to the Group’s taxable profit. These subsidiaries are undergoing a streamlining process aimed at rationalizing our chain of control and exiting tax heavens.
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