Chevron blasts tax judg­ment

Pilbara News - - News - Peter Wil­liams

A top Chevron ex­ec­u­tive says a tax rul­ing against the en­ergy gi­ant will af­fect in­vest­ment in Aus­tralia and dra­mat­i­cally change the rules for in­ter-com­pany lend­ing.

Chevron is con­sid­er­ing an ap­peal to the High Court af­ter los­ing a Fed­eral Court ap­peal against be­ing forced to pay up to $340 mil­lion to the Aus­tralian Tax­a­tion Of­fice for as­sess­ments from 2004 to 2008.

The as­sess­ments re­lated to in­ter­est paid by Chevron Aus­tralia to a US sub­sidiary, with the tax of­fice ar­gu­ing the com­pany had re­duced its li­a­bil­ity by shift­ing prof­its off­shore.

Chief fi­nan­cial of­fi­cer Pa­tri­cia Yar­ring­ton ex­pressed “huge dis­ap­point­ment” at the court’s de­ci­sion, say­ing it de­vi­ated sub­stan­tially from recog­nised in­ter­na­tional prac­tice.

“And in those guide­lines, the courts are to treat re­lated par­ties to a trans­ac­tion as if they were stand­alone sep­a­rate le­gal en­ti­ties,” Ms Yar­ring­ton told bro­ker­age an­a­lysts.

“I’d say that there’s an aw­ful lot at stake with this rul­ing, not just for Chevron but for any in­ter-com­pany lend­ing in Aus­tralia and more broadly around the globe, be­cause it fun­da­men­tally changes es­tab­lished trans­fer pric­ing prin­ci­ples.

“So if the rul­ing stands, it’s cer­tainly go­ing to af­fect any fu­ture in­vest­ment in Aus­tralia.”

Aside from an ap­peal, Ms Yar­ring­ton flagged pos­si­ble set­tle­ments with the tax of­fice and “any other rea­son­able res­o­lu­tion”.

Chevron had more wel­come tax­a­tion news, in re­gard to a Fed­eral Gov­ern­ment in­quiry on Fri­day choos­ing not to rec­om­mend ma­jor changes to the petroleum re­source rent tax.

Oil and gas multi­na­tion­als had been ac­cused of ex­ploit­ing PRRT de­duc­tions to avoid pay­ing tax in Aus­tralia.

“Any changes that are con­tem­plated will be prospec­tive, which is ex­actly what our po­si­tion was ... you can’t go back and change the rules of the game af­ter the in­vest­ments are made,” Asia Pa­cific ex­plo­ration and pro­duc­tion pres­i­dent Stephen Green said.

“We look for sta­bil­ity of fis­cal terms and con­di­tions that we in­vest un­der to be main­tained over the life of those in­vest­ments.”

He said a so­lu­tion to Aus­tralia’s emerg­ing east coast en­ergy cri­sis would de­mand sig­nif­i­cant cap­i­tal in­vest­ment.

“Aus­tralia is ap­pro­pri­ately try­ing to find the right bal­ance be­tween fis­cal needs in gov­ern­ment and pre­serv­ing what has been a very, very suc­cess­ful regime for at­tract­ing large cap­i­tal in­vest­ment, es­pe­cially in our sec­tor,” Mr Green said.

Chevron's Wheat­stone LNG project.

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