MELBOURNE
(Reuters) - Chevron Corp (CVX.N) has withdrawn an appeal to Australia's High
Court over a disputed A$340 million ($268 million) tax bill, leaving
in place a
landmark court ruling on related-party loans that could affect other
multinational companies.
"Chevron
Australia has reached agreement with the Australian Taxation Office on the loan
transfer pricing dispute and have withdrawn our appeal to the High Court,"
the company said in an emailed statement.
"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."
The oil and
gas giant and the tax office declined to comment on the size of the settlement.
With the
appeal withdrawn, a Federal Court ruling remains in place, which found Chevron
had underpaid taxes by setting up a A$2.5 billion intercompany credit facility
offshore with an abnormally high interest rate, effectively lowering its
taxable income within Australia.
The tax
office estimates the court's decision will result in more than A$10 billion in
additional revenue being brought in over the next 10 years related to
multinationals' transfer pricing of related-party financing alone, the
government said.
"Not
only does this result put more revenue back to the Australian people, it also
strengthens the ATO's position in pursuing other arrangements where
multinationals seek to dodge Australia's transfer pricing rules," Revenue
and Financial Services minister Kelly O'Dwyer said in a statement.
Chevron did
not say why it decided to drop its appeal to the nation's highest court. It
lost an earlier appeal in Australia's Federal Court in April. The case covered
the tax years from 2004 through 2008.
"The
judgment in Chevron is one of the most important decisions in corporate tax in
Australia," an Australian Taxation Office spokesman said in an emailed
statement.
The closely
watched case is a first test of how Australia's transfer pricing rules apply to
interest paid on a cross-border related-party loan.
"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.
The tax
office declined to name which companies it may pursue.
($1 = 1.2665
Australian dollars)
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