A public interest group has revealed that much of BP’s $20.8bn settlement for the Deepwater Horizon disaster could be written off in tax deductions.
The Public Interest Group (PIRG) says the oil giant may be able to write off $15.3bn of that amount as “business expenses”.
When the total of $20.8bn was announced on Monday it was described as the largest corporate settlement of its kind in US history. The tally comprises penalties and costs payable to the federal government, five Gulf Coast states and hundreds of municipalities over a period of 18 years.
Under US tax code, restitution, reimbursement, and compensatory payments made to damaged parties in a settlement can be claimed as ordinary “cost of doing business” tax deductions
Another amount, the $32 billion that BP spent to clean up the Gulf area after the oil spill was also tax deductible, and cost US public coffers $10 billion.
On 20 April 2010 a huge explosion on the Deepwater Horizon drilling rig in the US Gulf of Mexico killed 11 men and led to an 87-day gush of crude from the resulting uncapped well. It was the worst offshore oil spill in US history, amounting to an estimated 3.19 million barrels of oil.