AUSTRALIA

Chevron's tax headache worsens

WEEKS after Chevron Australia was hit with a tax bill of about $300 million after losing a landmark profit-shifting case, documents filed with the Senate inquiry into corporate tax avoidance show accuse its parent of paying income tax of just $248 on estimated $1.73 billion profit on interest charges to its Gorgon LNG project.

Chevron's tax headache worsens

The documents allege that Chevron Corporation's subsidiary, registered in the US corporate tax haven of Delaware, charged Chevron Australia $1.8 billion in 2014, more than 25 times the interest cost it pays to external lenders, on $36.5 billion of debt.

Documents submitted to the inquiry by the International Transport Workers' Federation, which is waging a wide-ranging union war against Chevron, appear to show that Chevron Australia Petroleum Company paid less than $200 for the past decade.

The ITWF claims Chevron companies in Singapore charged interest rates of less than 0.2%, but the US subsidiary then charged Chevron Australia more than 5% interest.

The ITWF submission also included corporate filings by, which show the interest rates for unsecured loans between Chevron group subsidiaries last year were between 0.17 per cent and 0.19 per cent.

The Australian Tax Office is conducting an audit on the funding arrangements on the $US54 billion ($A76 billion) Gorgon LNG project after last month's ruling that Justice Alan Robertson found that a $US2.54 billion loan to Chevron Australia between 2003 to 2008 was to "obtain a scheme benefit" on a separate loan in similar pricing differences.

However, in his opening remarks Justice Robertson stated the proceedings did not involve the general anti-avoidance provisions of the tax law, and nor did they "involve any allegation that the credit facility agreement was a sham."

Yesterday the Australian Financial Review claimed a senior US Chevron executive will be in Australia to testify before the Senate next week.

Chevron is reviewing the October ruling, and claims that at all times it has complied with all applicable laws and regulations in the countries in which it operates.

It has just days to decide if it wants to appeal.

Chevron is also facing audits in Nigeria going back to 2000, in Angola since 2001, Saudi Arabia since 2012 and Kazakhstan since 2007, and its US tax filings have not been approved for the better part of a decade.

The unions argue that finance charges over the life of the Chevron Australia loan suggested that interest charges would surpass the $35 billion amount of the credit facility, so it is clear the company is deliberately using finance mechanisms to reduce both profits and tax payments.

A Chevron spokesperson told Energy News that the company was reviewing the decision and does not intend to comment further while appeals are being considered.

"Chevron abides by a stringent code of business ethics, under which we comply with all applicable laws and regulations in the countries in which we operate," the spokesman said.

In Australia, in the past five completed financial years Chevron has paid more than A$3 billion in Federal and State taxes and royalties, the company has said previously.

"The company's current income tax profile reflects where we are in our investment lifecycle. That is, the costs associated with funding the Gorgon and Wheatstone projects, along with our significant exploration and R&D (research and development) spend, has largely offset revenues generated from our existing primary sources of income.

"However, once Gorgon and Wheatstone have completed construction and are in full production, they are expected to significantly bolster government revenue over their operating lives."

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