Chevron has decided to take its tax battles to the High Court of Australia after it was reported that the supermajor is in the crosshairs of the Australian Tax Office (ATO) for a disputed AU$1 billion outstanding tax bill.

This comes after the Federal Court ruled in favor of the ATO in April in Australia’s biggest ever transfer pricing case. The court ordered Chevron to pay $340 million in taxes, penalties and interest arising from a 2003 interest loan of $1.84 billion paid by Chevron Australia to Chevron Corp. in the U.S. for part ownership of the North West Shelf gas project.

Chevron came out fighting, however, after it emerged this week that the ATO had slapped the supermajor with a $1 billion back tax bill as part of a $4 billion tax windfall being pursued against big international energy and tech corporations.

Chevron’s latest dispute with the ATO relates to the rate of interest its Australian subsidiary pays servicing a $42 billion loan from Chevron in the U.S. to finance and build the Gorgon and Wheatstone LNG plants off Western Australia.

The dispute with Chevron is believed to be the biggest single corporate tax issue currently being contested in Australia.

Chevron signalled its intention to front up to the ATO, saying in a statement it would seek special leave to appeal its dispute with the ATO to the High Court of Australia. The San Ramon, Calif.— headquartered supermajor also refuted reports that it had paid no tax in Australia for five of the past seven financial years.

“As recognized by the Federal Court, Chevron Australia’s financing is a legitimate business arrangement, and the parties differ only in their assessments of the appropriate interest rate to apply,” Chevron said.

“Chevron Australia pays a substantial amount of tax in Australia, including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax. Since 2009, we’ve paid about $4.5 billion in federal and state taxes and royalties.

“We are one of Australia’s largest investors and employers. In addition to tax payments, Chevron will continue to deliver substantial economic benefits for decades to come.”

In a recent Senate inquiry into corporate tax avoidance of Australia’s 30% company tax rate, Chevron stated in a written reply that it disagreed with the ATO on interest rate applications.

"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 total difference in primary tax on all years currently in dispute is $1.062 billion," Derek Floreani, Chevron's general manager finance and compliance wrote.

The $54 billion Gorgon project began production last year having suffered cost blowouts of US$17 billion and start up delays. First gas from the $34 billion Wheatstone project—which has sustained cost overruns of US$5 billion—has been extended from July to August after the start-up was initially delayed by a year.

Chevron’s latest annual report estimated that its stake in Gorgon and Wheatstone would yield cashflows of almost US$50 billion at average oil prices of US$55 a barrel.

As a result of capital investment and write offs, Chevron will only begin paying federal royalties from Gorgon by 2029-2030 under concessions in the petroleum resource rent tax. The Barrow Island LNG plant is not subject to state royalties as an offshore entity.

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