22 August, 2017
Chevron has withdrawn an appeal to Australia's High Court over a A$340 million ($268 million) tax bill, in a case that could affect other multinationals operating in the country.
"Chevron Australia has reached agreement with the Australian Taxation Office (ATO) on the loan transfer pricing dispute and have withdrawn our appeal to the High Court," the company told Reuters.
"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."
Australia's Federal Court found in April that Chevron had underpaid taxes by setting up a A$2.5 billion ($2 billion) intercompany credit facility offshore with an high interest rate, effectively lowering its taxable income in Australia.
Australian minister for revenue and financial services Kelly O'Dwyer said the government welcomed the withdrawal of Chevron's appeal.
"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. The case also raised constitutional issues regarding transfer pricing provisions," O'Dwyer said.
"[This] is a significant win for the Australian community. The ATO’s initial estimates are that the Chevron decision will bring in more than A$10bn ($8bn) dollars of additional revenue over the next ten years in relation to transfer pricing of related party financing alone," she 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," O'Dwyer said.
For further information, please contact:
Ian Laing, Partner, Pinsent Masons
ian.laing@pinsentmasons.com
