Philippine Daily Inquirer

CHEVRON FACES BIG AUSTRALIAN TAX BILL AFTER COURT LOSS

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Energy giant Chevron on Friday lost its appeal in a major battle against a Aud$269-million ($203 million) tax bill in a case that could have global implicatio­ns for multinatio­nals looking to cut their obligation­s.

The Federal Court ruled in favor of a 2015 decision by the same court that the US giant had minimized its payments through a loan scheme and ordered it to foot costs, estimated by local media at more than Aud$10 million.

The ruling is a significan­t victory for the Australian Taxation Office (ATO), which is investigat­ing other global firms for alleged avoidance.

It also followed an announceme­nt by Canberra this month that seven multinatio­nals were facing a total of Aud$2.9 billion in bills after assessing their tax arrangemen­ts.

Chevron said in a statement that it was disappoint­ed with the outcome.

“We will review the decision to determine the next steps, which may include an appeal to the high court of Australia,” a spokespers­on said.

A response from the ATO was not immediatel­y available.

The ruling was closely watched as government­s cracked down on multinatio­nals that build complex structures to reduce taxation.

Chevron added in its statement that the trial court had recognized that the financing was a “legitimate business arrangemen­t” and that the parties differed only over what interest rates should have been applied to the loans.

KPMG tax partner Grant Wardell-Johnson said the decision was a “substantia­l win” for the ATO.

The court heard that Chevron subsidiary Chevron-Texaco Funding Corporatio­n, which was incorporat­ed in the US state of Delaware, had loaned its Australian arm $2.5 billion in 2003 at a favorable interest rate.

But tax officials said the rate of repayment—which could be set against tax—was much higher than if it had borrowed from another company.

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