Bankers obtained a commitment from the Albanian natural resources agency to engage a third-party international auditor to resolve the tax dispute in September 2015, with both sides unable to reach a settlement.
Bankers Petroleum Ltd., a Canada-based oil and gas exploration and production company, has signed a formal agreement for the appointment of an “international expert audit team” to resolve its long-standing tax dispute with the Government of Albania.
The dispute centers on USD250m in expenditure that the company offset against profit tax in 2011. The Albanian National Agency for Natural Resources (AKBN) is of the view that this expenditure was outside of the scope of the company’s Petroleum Agreement and License Agreement, and the country subsequently issued Bankers with a USD57m bill for back taxes – an assessment that Bankers appealed.
Bankers obtained a commitment from the AKBN to engage a third-party international auditor to resolve the tax dispute in September 2015, with both sides unable to reach a settlement.
The company’s legal challenge was already subject to international arbitration proceedings when the agreement, announced on February 24, was signed. The proceedings have now been suspended as a result of the appointment of the independent audit team. Bankers said the latest audit will likely conclude in the second quarter of 2016, writes tax-news.com
Bankers also said that it will seek to clarify with AKBN the terms of the Petroleum Agreement and License Agreement, subject to the resolution of the tax dispute. The parties have also committed to using any new determination on what constitutes qualifying expenditure as the basis for certifying petroleum costs in subsequent years, including to calculate the company’s tax obligations for 2012.
David French, President and Chief Executive Officer of Bankers, said: “Resolving this dispute will send a great signal that Bankers and the Government of Albania are working together to encourage investment and development. We look forward to reaching an appropriate outcome, and turning our attention to continuing to manage the Patos-Marinza field for the best interest of the Government, the environment, our employees, and the local Albanian communities we serve.”