Thailand: Customs mulls Chevron tax bill

Thailand: Customs mulls Chevron tax bill

The Customs Department is considering the tax liabilities Chevron Thailand
Exploration and Production must pay after the Council of State decided oil
transported for use on its rigs located farther than 12 nautical miles
offshore should be counted as a domestic purchase.

The department is calculating how much tax will be retrieved from the
petroleum explorer as Chevron claimed tax refunds during two periods --
between March 2011 and March 2014, and February 2015 and October 2016, said
Kulit Sombatsiri, director-general of the department.

Chevron purchased oil and transported it to its petroleum rigs, located on a
continental shelf that is farther than 12 nautical miles from the coast. It
claimed a refund of excise duties worth 3 billion baht from Customs, which
took responsibility for collecting tax instead of the Excise Department,
claiming such transactions were considered exports.

Mr Kulit took an interest in Chevron's tax refund case because he believed
such transactions should not be counted as exports. The issue involves the
country's sovereignty rights and state officials hold two differing opinions
on the matter.

In 2010, the Customs Department's committee tasked with considering tax
issues considered a request by PTT Exploration and Production, which sought
clarification on whether oil transported to rigs located farther than 12
nautical miles offshore should be viewed as exports. The committee
determined they should be considered exports.

The UN Convention on the Law of the Sea defines the territorial boundary as
12 nautical miles beyond the coastline. However, the Supreme Court earlier
ruled that the territory extends to the continental shelf.

Chevron's executives could not be reached for comment.

However, a source who asked not to be named said the company has only seen
media reports. It has not yet seen any official notice from the Council of
State.

"Our company has complied with Thai law since starting operations here,"
said the source.

Mr Kulit said the Council of State's interpretation seemed to be setting a
practical guideline for all Customs officials to apply.

An informed source at the Finance Ministry said the fact-finding committee
on Chevron's tax refund chaired by Inspector-General Lavaron Saengsanit is
expected to complete its investigation within this month into whether state
officials involved in the case performed their duties honestly.

Before the Customs committee decided shipping oil to petroleum rigs located
more than 12 nautical miles offshore was an export, Customs officials
determined such transactions are domestic purchases, which are subject to
excise tax, contributions to the Oil Fund and value-added tax.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1183477/customs-mulls-chevron-tax-b
ill

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com