Oil and gas giant Chevron has settled a long-running transfer pricing dispute with the Australian
Tax Office for an undisclosed sum, although the figure is likely
to be well in excess of $1 billion.
Chevron had been planning to challenge the matter in the High
Court but lodged a notice of discontinuance on August 15, a court
The company’s decision to withdraw is a major win for the ATO and Australian
government, which will collect billions of extra tax revenue from
a range of other foreign multinationals as a
result of the precedent set in this case.
Chevron confirmed it was discontinuing the challenge in a
statement to The Australian Financial Review on Friday.
“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withdrawn our appeal to the High Court,” the company said.
“Chevron believes the agreed terms are a reasonable resolution of
Chevron had been seeking leave to appeal a full Federal Court
decision last August, which upheld an outstanding tax bill worth
The bill relates to a $US2.5 billion ($3.7 billion) loan used to
fund development of gas reserves off Western Australia.
However, Chevron and the ATO are in dispute over more than $340
million in tax and penalties.
In response to a question on notice by the Senate’s inquiry into
corporate tax avoidance, Chevron confirmed its the amount in
dispute over all years was $1.062 billion.
“Chevron Australia and the ATO disagree on how the law applies to
determine the interest rate to apply to Chevron Australia’s
financing arrangements,” the general manger of finance and
compliance, Derek Floreani, wrote.
“The total difference in primary tax on all years currently in
dispute is $1.062 billion.”
Clayton Utz partner Niv Tadmore said it was important to note
that the matter dealt with in the Chevron decision related to old
transfer pricing laws, which had since been updated.
“I would not be surprised if a case on the new regime – Division
815B – finds its way through the system all the way to the High
Court in due course,” he said.
This article first appeared on the AFR.com. See the original
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