Exxon Corporation - Page 14




                                       - 14 -                                         
          except interest expense, of producing taxable income relating to            
          North Sea petroleum resources are currently deductible.  To                 
          prevent the use of intercompany debt as a means of avoiding or              
          minimizing liability under the Ring Fence Tax and PRT, deductions           
          for interest expense are limited under the Ring Fence Tax and are           
          not allowed under PRT.                                                      
               Initial calculations of profits under PRT are made at the              
          field level, with current deductions from gross revenue generally           
          allowed for all ordinary as well as capital expenses relating to            
          the field.  Current deductions are allowed for, among other                 
          things, costs of exploration and appraisal activities, start-up             
          activities, operations, production, storage, treatment,                     
          transportation, administrative and overhead activities, buildings           
          and structures (if placed on the seabed or used in production,              
          measurement, transportation, or initial treatment and storage of            
          petroleum products), and abandonment activity relating to a                 
          field, as well as costs of conducting arm’s-length sales of                 
          petroleum products and of exploring and evaluating areas outside            
          a field that do not result in discovery of new fields.                      
               As indicated, under PRT, current deductions are not allowed            
          for interest expense, and current deductions are not allowed for            
          costs of acquiring licenses from private parties, for payments to           
          private parties holding overriding royalty and similar interests            
          in a field, for expenses incurred in producing income exempt from           






Page:  Previous  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  Next

Last modified: May 25, 2011