chevron faces big australia tax bill after court loss
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
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Chevron faces big Australia tax bill after court loss

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Arab Today, arab today Chevron faces big Australia tax bill after court loss

Australia's Federal Court ruled in favour of a 2015 decision by the same court that Chevron
Chicago - Arab Today

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

The Federal Court ruled in favour of a 2015 decision by the same court that the US giant had minimised its payments through a loan scheme and ordered it to foot costs, estimated by local media at more than Aus$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 Aus$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 spokesman said.

A response from the ATO was not immediately available.

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

Chevron added in its statement that the trial court had recognised 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.

"Many taxpayers will need to review their transfer pricing methodologies," he told The Australian Financial Review.

The court heard that Chevron subsidiary ChevronTexaco Funding Corporation, which is incorporated in the US state of Delaware, had loaned its Australian arm $2.5 billion in 2003 at a favourable 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.

The ATO is currently carrying out 71 audits in 59 global firms, with some 1,000 officers part of a taskforce investigating companies' tax arrangements.

Canberra has sought to crack down on tax avoidance by multinationals by introducing new laws, including stronger protection for whistleblowers and harsher penalties for failure to meet compliance or disclosure requirements.

Companies including Apple, Google and BHP Billiton were grilled at parliamentary hearings on their tax structures in 2015. The Senate inquiry is expected to resume hearings next week.

source: AFP

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