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Alan’s 8.10 editorial 08.06.17

MML

Tax  June 8 2017

 

 

Well, back in April it was reported that the Tax Office’s win against multi-national energy company, Chevron, in the Federal Court could result in Chevron being liable for an extra $340 million in tax

But it now turns out Chevron could be liable for much more

Chevron told the Senate inquiry into corporate tax avoidance yesterday that “the total difference in primary tax on all years currently in dispute is $1.062 billion”

The facts of this dispute are pretty straightforward

In 2003 Chevron set up a shelf company in the US

That shelf company then borrowed $3.7 billion from banks in the US at 1.2% interest and on-lent that money to Chevron Australia at 9% interest

This inter-company loan allowed Chevron Australia to write-off those 9% interest payments against its Australian tax bill

It also allowed Chevron to transfer profits from its Australian operations to the US (via these interest payments) tax free

The Tax Office spent 6 years building its case against Chevron

In 2015 it won in the Federal Court

Chevron appealed

That appeal was rejected by the full Federal Court in April

Chevron says it will now appeal to the High Court

Since 2003 Chevron, which has paid no company tax in Australia for the last 5 years, has reportedly set up so-called “transfer pricing” inter-company loans to the value of $24 billion

These outfits may have met their match in Australian Tax Commissioner, Chris Jordan

 

 

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