06 October 2012

Government recovers $300 million in taxes from oil companies



Alfredo Pires
ETLJB 06 October 2012 - Amidst the controversies surrounding the exploitation of oil and gas reserves in the Timor Sea, the Government of East Timor has managed to recover $300 million in taxes owed to it by several international energy companies that operate the oil rigs while one of those companies has sued the government in the Courts disputing its liability.

There are several multinational oil companies operating in the Timor Sea including ConocoPhillips, Inpex, Santos, Eni and Woodside. It is not clear which companies owed the tax.

As with other critical issues such as the importation of weapons from Indonesia for the police and the military, the Government has failed to be transparent about the tax revenue problems in failing to inform the people of the outstanding tax arrears or the fact that some have been recovered.

The Minister for Natural Resources, Mr. Alfredo Pires, was reported by Tempo Semanal on 14 September as saying "the taxation department has identified discrepancies in terms of the tax that the companies should have paid to the government and the government felt that those matters needed to be attended to. So, relevant papers were sent to the companies on different issues. Until today government, I can say we have collected around $300 million and the government is still examining other issues in respect of which taxes have not yet been paid."

But at least one of the oil companies has disputed its liability to pay certain taxes demanded by the government and has commenced court proceedings against the government.

Minister Pires explained that "what specifically happened was that in some cases where the government issued tax notices, the companies felt that perhaps they did not have to pay. And if you have disputes, you can go to arbitration or you can go to the courts to settle the issues and one company has taken the government to court. The government is defending those proceedings and we have to let the procedures take place."

The head of Conoco Philips, Todd Creeger,  is reported by Tempo Semanal as saying that "the tax audit will be resolved in the due course and we have had very good relations over the last ten years with the government which we expect to be continued." Mr Creeger also referred to the companies activities and projects as well as the fact that it provides employment for East Timorese workers.

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