INPEX Australia

2021 Tax transparency reportOur company has been an active member of the Australian business
community since 1986. INPEX CORPORATION, our parent company,
is listed on the Tokyo Stock Exchange and is 18.9 per cent owned by
the Japanese Government.
We are committed to responsibly managing our business activities,
including upholding the Voluntary Tax Transparency Code.
We believe tax transparency strengthens trust and accountability
between industry, government and communities, while enhancing
the investment environment by encouraging good business practice.
We invite you to review our fifth annual tax transparency report-which highlights the positive social and economic contribution INPEX
is making in Australia through our tax contributions.

Hitoshi Okawa
President Director, Australia
December 2022

INPEX in Australia
Browse Basin

Darwin• Ichthys LNG Project (Offshore facilities- INPEX Ichthys 100%)• Ichthys LNG Project (Onshore
facilities - 66.245%)• Prelude Floating LNG (17.5%)• Darwin LNG (INPEX DLNGPL- 11.37812%)

TIMOR-LESTE

Carnarvon Basin

TIMOR SEA

• Van Gogh and Coniston oil
fields (47.499%)• Ravensworth oil field (28.5%)• Griffin oil field (20%) –decommissioned

DarwinINDIAN OCEAN

BroomeExmouth		

WESTERN AUSTRALIANORTHERNTERRITORYINPEX Australia 2021 Tax transparency report

2International related party dealings
All international dealings by INPEX are conducted in accordance with
Australian and international tax law, and in keeping with the arm’s lengthprinciple recommended by the Organisation for Economic Co-operation andDevelopment (OECD).
INPEX follows global taxation trends and endeavours to respond to new
developments. In particular, INPEX will monitor developments in legislation
governing international transactions in Japan and other G20 countries based on
the report of the OECD/G20 Base Erosion and Profit Shifting Project, which aims
to prevent multinational enterprises from exploiting gaps and loopholes in tax
rules to shift profits to low or no tax locations.
INPEX’s head office is in Tokyo, and its Australian companies draw on INPEX’s
global pool of resources.

Business Services
INPEX companies in Australia draw on technical and general administrative
services in Japan to assist local operations. This maintains consistency across
INPEX’s global operations.

Financing
INPEX has a treasury company based in Singapore that manages all intragroupcash and funding needs and provides the risk management associated withrunning multiple currencies across the globe.

3

INPEX Australia 2021 Tax transparency report

Trading
INPEX has a trading company in Japan that INPEX Ichthys Pty Ltd and INPEX
Alpha Ltd use to sell product to end customers. This trading company manages
the interface and marketing arrangements.

Transfers within Integrated Projects
INPEX Ichthys Pty Ltd sells feed gas from the Ichthys gas condensate field toIchthys LNG Pty Ltd under a pricing formula based on the OECD residual profit
sharing transfer pricing methodology.
INPEX DLNGPL Pty Ltd receives a share of a gas pipeline tariff from INPEX Sahul,
Ltd (INPEX’s upstream participant on the Bayu-Undan project) for the use of thegas pipeline. The tariff rate is agreed with the Australian Taxation Office (ATO) in
an Advanced Pricing Agreement.

INPEX companies in Australia
INPEX has eight Australian-based entities and two branches of Japanese companies. These companies are all governed in accordance with the corporations laws ofAustralia and Japan. They are 100 per cent owned and controlled by INPEX. In 2021, INPEX held a share of 66.245 per cent in Ichthys LNG Pty Ltd, which is an incorporated
joint venture company. This company processes the feed gas sold to it by the Ichthys Upstream Joint Venture Participants. Ichthys LNG Pty Ltd is not covered in this report.

Company/branch nameMulti-entity
consolidation(MEC)

Japanese headcompany

Ultimate beneficial
ownerParticipating interest in
project name/function

INPEX Holdings Australia Pty Ltd (IHAPL)

INPEX Browse, Ltd

INPEX CORPORATION

Holding company

INPEX Browse E&P Pty Ltd (IBEPL)INPEX Browse, Ltd

INPEX CORPORATION

Exploration permits

INPEX Browse, Ltd

INPEX CORPORATION

Ichthys upstream project

INPEX CORPORATIONINPEX CORPORATION

Prelude Floating LNG

INPEX Ichthys Pty Ltd (IIPL)

Australian head company

INPEX Holdings Australia Pty Ltd(IHAPL)INPEX Oil & Gas Australia Pty Ltd (IOGA)

Branchof JapaneseentityINPEX New Energy Business Australia
Pty Ltd* (NEBA)INPEX Holdings Australia Pty Ltd(IHAPL)INPEX Browse, Ltd

INPEX CORPORATION

Renewable investmentcompany

INPEX Operations Australia Pty Ltd (IOAPL)INPEX Holdings Australia Pty Ltd(IHAPL)INPEX Browse, Ltd

INPEX CORPORATION

Operating company

INPEX Australia Pty Ltd (IAPL)

INPEX CORPORATIONINPEX CORPORATION

Australian payroll company

INPEX DLNGPL Pty Ltd (IDLNGPL)INPEX CORPORATIONINPEX CORPORATION

Darwin LNG

INPEX Browse, Ltd (IBL)

INPEX CORPORATIONINPEX CORPORATION

Holding company

INPEX Alpha, Ltd (Alpha)

INPEX CORPORATIONINPEX CORPORATION

GriffinRavensworth
Van GoghConiston* New entity incorporated on 16 December 2021

		

INPEX Australia 2021 Tax transparency report

4

Taxation governance and standards
All INPEX companies and branch entities operating in Australia are compliant
with Australian tax law. INPEX companies that operate in Australia either pay
income tax now, or will pay income tax once major development projects moveinto the production phase. Other employment and transactional taxes willremain payable throughout the operational life of development projects.
The boards of directors for INPEX companies that operate in Australia are
responsible for maintaining a system of risk management, governance andcontrols across all business operations, including the approach to tax, supported
by executive management.
The directors and executive management of INPEX acknowledge that tax is oneof our important social responsibilities for the contribution this makes to thesocial and economic development of the countries and regions in which we
operate. INPEX meets this responsibility by ensuring the proper payment of tax
in accordance with the applicable laws and regulations and conducting our tax
affairs in a transparent manner. The INPEX Global Taxation Policy, which dictates
the direction and resources for INPEX entities globally, reflects our socially
responsible approach. A copy of the global tax policy can be found at https://www.inpex.co.jp/english/csr/governance/tax.html.

INPEX periodically draws on its internal audit and risk functions to testcompliance with the Tax Standard, and to continuously improve reporting on
processes and governance matters. Significant matters relating to taxation affairs
are also audited by external auditors. Global taxation governance of INPEX
ensures material companies are subject to Japan’s Sarbanes-Oxley Financial
Instruments and Exchange Act 2006, in addition to the laws of the countries inwhich the companies are based.
INPEX’s Code of Conduct stipulates that the company must build sound andappropriate relationships with government and administrative authorities. INPEX
is in regular communication with the ATO and responds in a cooperative andtimely way to information requests. INPEX aims for certainty on material tax
positions it adopts. INPEX engages with the ATO when matters are significant,complex or uncertain.
INPEX provides workforce education and training to actively promote tax
compliance of its people, as required by their roles.

In addition to the Global Taxation Policy, INPEX companies that operate inAustralia also follow the Company’s Tax Standard which sets out the approachto tax risk management, compliance processes, as well as engagement with the
ATO and other revenue agencies.

		

INPEX Australia 2021 Tax transparency report

6

Tax contribution life cycle

Project phase

Explore and appraise

Develop

Revenues received

None

None

Tax contributions

Payroll tax

Payroll tax

Fringe benefits tax (FBT)FBTGoods and services tax (GST)

GST
Duty on imported capital equipment
Interest withholding tax

Costs incurred

Seismic acquisition
Drilling

Capital expenditureRamp up

Produce

AbandonInitial revenues which do not cover costs

Revenues exceed costs

None

Payroll tax

Payroll tax

Payroll tax

FBT

FBT

FBT

GST

GST

GST

Duty on imports

Duty on imports

Interest withholding tax

Interest withholding tax

Excise/fuel tax

Excise/fuel tax
Income tax
Petroleum resource rent tax

Operating costs

Operating costs

Capital expenditure

Sustaining investment

Decommissioning costs

Ichthys LNG contributing to
the Australian economy andcommunity
Investing billions of dollars in one
of Australia’s largest-ever energy
developments

Creating thousands of Australian jobs

Providing taxation revenue forAustralian governments
Bringing multi-generational
economic and community benefits
to the people of Australia for the next
40 years

9

INPEX Australia 2021 Tax transparency reportGlobal transparency andsustainability initiatives
INPEX is committed to achieving Sustainable Development Goals through its business activities
and works within international frameworks to strengthen the social and economic benefits of its
operations.
Since October 2012, INPEX has been a part of the Extractive Industries Transparency Initiative(EITI), working closely with governments, companies and civil society to promote transparency.
EITI monitors and reconciles the payments made by companies to government and government
to communities.
Through EITI, INPEX is helping improve governance, reduce corruption and promote economic
growth through stronger accountability and transparency.
INPEX supports global standards relating to human rights, such as the International Bill of Human
Rights, the International Labor Standards of the International Labor Organization and the UN
Guiding Principles on Business and Human Rights. In 2011, INPEX adopted the Ten Principles of
the UN Global Compact, including areas relating to labour, environment and anticorruption
To comply with the United Kingdom Modern Slavery Act 2015, since 2016 INPEX Corporation
has annually released a statement on its website to disclose the policies, systems and measuresthat we have in place to prevent slave labor and human trafficking within the Company andthroughout the supply chain.
Further, since 2021, INPEX has issued annual Modern Slavery Statements in compliance with theAustralian Modern Slavery Act 2018 in respect of the activities of its Australian subsidiaries.
INPEX is an active member of IPIECA, the global oil and gas industry association forenvironmental and social issues.
For more information on INPEX’s global social and economic benefits and the projected
contribution of Ichthys LNG to Australia’s economy, please visit the INPEX Australia website athttps://www.inpex.com.au/news-and-updates/publications/		

INPEX Australia 2021 Tax transparency report

10

Reconciliation and effective tax rates for the year
(ended 31 December 2021) (in millions)
Table 2: Accounting income per financial statements and replica of tax note from respective financial
statements
Item*IHAPL($USD)IOGA($USD)IBEPL($USD)

IAPL($AUD)IDLNGPL($USD)

Total income

2,741

248

0

397

11

Accounting Profit/(Loss) before taxation

1,636

50

-9

0

7

Prima facie tax at 30% Australian tax rate

-491

-15

3

-0

-2

Material Permanent Differences:- Prior Year under/over

1

0

-

-0

1

- De-recognition DTAs

-17

-

-

-

-

- Recognition DTAs

-

-

-

-

-

- Non-taxable income

117

-

-

0

2

-

-9

-

-

-

Total income tax benefit/(expense) per accounts

-390

-23

3

-0

1

Effective tax rate

24%

47%

-

-

-

- Asset true-up* Denotes the IHAPL accounting group which is IHAPL, IIPL and IOAPL only.

Table 2 reconciles accounting profit to income
tax expense (accounting). All financial statements
for INPEX’s Australian companies and branches ofJapanese companies are lodged with the Australian
Securities and Investments Commission (ASIC). For
the branch entities, Australian tax effect accounting
is not required and instead tax effect accounting isapplied under tax regimes in Japan and Australia
in accordance with Japanese Generally Accepted
Accounting Principles.
The effective tax rates disclosed in Table 2 are
calculated by dividing the relevant company’s
income tax expense by their accounting profit
before taxation. IHAPL and IDLNGPL’s low effective
tax rates are a consequence of the adjustments
required to reflect the equity accounted gains andlosses in regards to their investments in Ichthys
LNG Pty Ltd and Darwin LNG Pipeline Pty Ltd
respectively.
IOGA’s high effective tax rate is a consequence of
permanent asset adjustments required to reflect
historic accounting and tax capitalisation events.
INPEX has a prima facie effective tax rate of 66.8 percent globally. The Japanese statutory tax rate is 28
per cent. For more information on INPEX’s global
taxation please see note 8 on page 92 in the INPEXAnnual Report 2021 at https://www.inpex.co.jp/
english/ir/library/pdf/annual_report/inpex_single_
annualreport202112_en.pdf

11 INPEX Australia 2021 Tax transparency reportAustralian Tax
Contribution Summary
Table 3: INPEX Australian Group taxes paid 2011 to 2021 ($A million)
Tax Payment

2011 – 2020*

2021

Total
($AUD)

Income Tax

722

8

731

Fringe Benefits Tax

83

10

93

Royalties---

Excise

-

-

-

131

19

150

230^

46

276

Stamp Duty

89

-

89

Foreign Resident Withholding Tax

-

-

-

GST - Denied Input Tax Credits

-

-

-

1,256

83

1,339

Payroll Tax
Interest Withholding Tax

Total contributions*Tax payments between 2011 – 2017 were made during a period when INPEX was investing in a
number of Australian LNG projects.
^Note this contains a correction to 2019 and 2020 for additional amounts paid		

INPEX Australia 2021 Tax transparency report

12Australian income tax return disclosures for the year
(ended 31 December 2021) (in millions)
Table 4: Australian company accounting profit to tax payable reconciliation (in millions)
Particulars

MEC($AUD)

IAPL($AUD)IDLNGPL($AUD)

Total income as per tax return

4,433

399

15

Tax return profit/(loss) before adjustments

2,214

0

9

-453

-

-9

- Research and development concession – permanent

-

-

-

- Assessable dividend income

-

-

14

-49

0

-

- Timing adjustments related to assets

-627

-

0

- Borrowing costs

-32

-

-

- Tax losses utilised

Material adjustments
Permanent:- Equity accounted (profit)/losses - (not assessable)/not deductible- Other permanent
Temporary:-1,155-4-- Adjustments related to restoration - restoration amounts become deductible once paid for tax purposes

84

-

0

- Sundry differences

11

-0

0

- Research and development concession - temporary

8

-

-

- Employee provisions

-

17

-

Taxable income/(loss)

0

13

15

Tax payable (at 30%)

0

4

5

Tax credits utilised

-0

-0

-5

Income tax paid

0

4

0

2,858^

-

-

3,575

4

-

Tax losses carried forward
2020 Tax losses carried forward

13 INPEX Australia 2021 Tax transparency report

Table 4 reconciles accounting profit
to taxable income to tax paid basedon lodged tax returns with the ATO.
The total income, taxable income
and tax payable for IHAPL, IAPL andAlpha will be formally released by theCommissioner of Taxation, as these
entities all have total income in excess
of AU$100 million for the income year
ended 31 December 2021.
^ The MEC group operates as a USD functional
currency entity, but the tax return must disclosein AUD. The foreign exchange (FX) rate
movement for tax return disclosure purposes
accounts for why the tax loss movement does
not directly correspond with the tax losses
utilised in the 2021 income year (AUD-USD
exchange rates 2021: 0.7514 and 2020: 0.6903).

Australian income tax return disclosures for the year cont.
(ended 31 December 2021) (in millions)Tax effect accounting for INPEX branch entities is not performed in Australia,
however, INPEX has summarised the branch contributions (in millions) to thelodged tax returns as follows:
Particulars$AUD

Total income as per the tax return197

Tax return profit/(loss) before adjustments-338

Taxable income/(loss)-0

Tax Payable (at 30%)-

Combined tax losses carried forward

1452019 combined tax losses carried forward

220

		

INPEX Australia 2021 Tax transparency report

14

T: +61 8 6213 6000
F: +61 8 6213 6455
E: enquiries@INPEX.com.au@INPEXaustralia@INPEXauINPEX Australia
Level 22, 100 St Georges Terrace
Perth, Western Australia 6000

@INPEXaustralia@INPEXaustralia© INPEX December 2022