U.S. oil and gas companies pay more taxes abroad than at home

Major U.S.-based oil and gas companies such as ExxonMobil, Chevron and Conoco Phillips are paying billions of dollars more in taxes in other countries than in the U.S., according to a new report.

The report, released Thursday by the Financial Accountability and Corporate Transparency Coalition, found the generous treatment of foreign tax credits to be one of the main factors behind the disparity, along with special tax breaks that have been exacerbated by the new tax law. Even though they are collectively producing more oil and gas domestically than in all other countries combined, American multinational oil and gas companies only reported owing less than one-fifth of their overall taxes in the U.S.

For the report, researchers at the FACT Coalition analyzed disclosures from 11 publicly traded U.S. oil and gas companies between 2018 and 2024. The report found that U.S. oil and gas companies owed an average of only 12% in federal taxes on their domestic income since 2017 — far less than the 21% statutory rate for corporate taxes — based on their disclosed “current tax expense.” 

The low rates come courtesy of a group of industry-specific subsidies and rules that enable companies to offset U.S. taxes with payments to foreign governments, including in places prone to corruption or weak oversight.

ExxonMobil reported paying nearly five times as much tax to the United Arab Emirates than to the U.S. government in 2023 and 2024. The second biggest American oil company, Chevron, had an average U.S. effective federal tax rate on its domestic profits of only 7.9% since 2017, when calculated by current tax expenses. Another U.S.-based oil giant, ConocoPhillips, paid over twice as much tax to Libya as the U.S., even though producing more than 70% of its oil and gas domestically. 

“American taxpayers are effectively subsidizing oil drilling abroad, including in authoritarian regimes,” said Ian Gary, executive director of the FACT Coalition, in a statement. “This dynamic drains public coffers, weakens U.S. energy independence, and channels taxpayer support to regimes that often lack transparency and accountability. This isn’t just bad tax policy; it’s a raw deal for working families who are picking up the slack at home.”

The impacts are likely to be exacerbated by the passage in July of the One Big Beautiful Bill Act, which extended a number of tax breaks that corporations received from the Tax Cuts and Jobs Act of 2017.

“On top of those tax cuts, there’s additional benefits that these big corporations will receive with respect to their international operations,” said Zorka Milin, policy director at the FACT Coalition and coauthor of the report, in a recent interview. “Some of the reduced tax rates on international income that were set to step up, those step ups have not been fully realized because of the bill. According to official revenue scores from experts at the Joint Committee on Taxation and the Congressional Budget Office, the tally is about $170 billion of extra tax cuts over the next 10 years from those international provisions. The whole picture is actually pretty striking when we consider both the domestic piece in terms of the R&D and other provisions that were extended, on top of these international tax breaks, it adds up to quite a lot, and it’s actually a pretty substantial part of what is driving the deficit impact of the bill, which is significant.”

There were special tax breaks in the OBBBA specifically for the fossil fuel industry, while removing tax credits for renewable energy sources such as wind and solar as well as electric vehicles. 

International tax subsidies for U.S. oil companies include exempting all income from foreign oil and gas extraction from the U.S. global minimum tax regime. The OBBBA renamed some of the taxes from the TCJA. Net Controlled Foreign Corporation Tested Income is the new name of the tax regime that replaced Global Intangible Low-Taxed Income. The changes, effective for tax years starting after Dec. 31, 2025, modify how the U.S. taxes foreign earnings of controlled foreign corporations. There’s also preferential treatment for multinational oil and gas companies allowing them to claim extra large foreign tax credits.

The Treasury Department has estimated that these two tax breaks alone will cost taxpayers more than $75 billion over 10 years. In addition, a new OBBBA provision allows large oil companies to reduce or eliminate their tax bills under the Corporate Alternative Minimum Tax, which was included as part of the Biden administration’s Inflation Reduction Act of 2022 as a way to ensure billion-dollar corporations pay at least 15% of their profits in taxes.

“That’s still largely untouched, except things around the edges, but CAMT is still in play,” said Milin. “There was one change in particular that makes CAMT less of an issue for oil companies because it changes the treatment of a tax break for intangible drilling costs. That’s quite a generous deduction. Previously, many oil companies were worried about CAMT and were telling their investors they’re worried, but they managed to get Congress to change how this deduction is treated for CAMT purposes. Certain oil companies will have an easier time with CAMT. But in general, it’s still something that companies have to go through the process of doing the calculations to figure out if they have to pay CAMT, so there’s still plenty of work for tax professionals with CAMT.”