Chevron drops ap­peal

"we have been very CLEAR THAT This Case WOULD have Di­rect im­pli­ca­tions for A num­ber Of Cases The ATO is Cur­rently pur­su­ing in re­la­tion TO RE­LATED party LOANS, As well As in­di­rect im­pli­ca­tions for Other Trans­fer pric­ing Cases."

The Australian Energy Review - - NEWS - El­iz­a­beth Fabri

US oil and gas gi­ant Chevron faces one of the largest tax bills in Aus­tralian history – be­lieved to be more than $1 bil­lion – af­ter back­ing out of its High Court ap­peal over a tax eva­sion dis­pute.

In Au­gust, Chevron with­drew its ap­peal over a Fed­eral Court rul­ing in April that the com­pany had un­der­paid taxes be­tween 2004 and 2008 by set­ting up a $US2.5 bil­lion loan from a Chevron sub­sidiary in Delaware, with an ab­nor­mally high in­ter­est rate; en­abling the com­pany to shift profits off­shore and lower tax on its Aus­tralian in­come.

The dis­pute in­volved $340 mil­lion in un­paid tax and penal­ties, how­ever Chevron re­vealed in June the to­tal tax dis­putes it had with the ATO amounted to $1.062 bil­lion.

Chevron said it reached an agree­ment with the ATO on the loan trans­fer pric­ing dis­pute, but de­clined to com­ment on the de­tails of the set­tle­ment or its rea­sons for with­draw­ing.

“Chevron be­lieves the agreed terms are a rea­son­able res­o­lu­tion of the mat­ter and are not ex­pected to have a ma­te­rial im­pact on the year to date re­sults of the com­pany,” Chevron told Reuters.

An ATO spokesman said the judge­ment was “one of the most im­por­tant de­ci­sions in cor­po­rate tax in Aus­tralia”.

“We have been very clear that this case would have di­rect im­pli­ca­tions for a num­ber of cases the ATO is cur­rently pur­su­ing in re­la­tion to re­lated party loans, as well as in­di­rect im­pli­ca­tions for other trans­fer pric­ing cases,” the ATO spokesman said.

Fed­eral Rev­enue and Fi­nan­cial Ser­vices min­is­ter Kelly O’dwyer wel­comed the news, claim­ing the res­o­lu­tion of this mat­ter was “a sig­nif­i­cant win for the Aus­tralian com­mu­nity”, and would bring in ad­di­tional tax rev­enue from multi­na­tional com­pa­nies over the next decade who were avoid­ing Aus­tralia’s 30 per cent com­pany tax rate.

“Chevron sought to chal­lenge Aus­tralia’s trans­fer pric­ing rules and the ap­pro­pri­ate method for es­tab­lish­ing an arms-length in­ter­est rate for a re­lated party loan,” Ms O’dwyer said.

“The ATO’S ini­tial es­ti­mates are that the Chevron de­ci­sion will bring in more than $10 bil­lion dol­lars of ad­di­tional rev­enue over the next ten years in re­la­tion to trans­fer pric­ing of re­lated party fi­nanc­ing alone.”

Im­age: Chevron.

the Chevron-op­er­ated Wheat­stone project, which is soon to be­gin pro­duc­tion.

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