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Bankers Petroleum Wins Albanian Tax Dispute

by Ulrika Lomas,, Brussels

30 August 2016

Bankers Petroleum Ltd., a Canada-based oil and gas exploration and production company, has announced that a binding third-party audit report has vindicated its position in a tax dispute with the authorities in 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 third-party audit was conducted by a joint panel of individuals from PricewaterhouseCoopers and Navigant Consulting Company, and according to an August 29 statement by Bankers, this panel determined that the company "correctly stated its 2011 expenses as cost recoverable according to the Petroleum Agreement and the License Agreement."

All parties have committed to using the results of this third party audit as the basis for determining recoverable petroleum costs in subsequent years, Bankers announced.

The company said it had paid a total of USD37m as of June 30, 2016, to the Albania tax office as deposits for the 2011 profit tax assessment. It is now up to the Albanian tax authority to recalculate the firm's tax obligations for 2011 and determine the appropriate mechanism to settle or reimburse Bankers for the payments made to date, the company added.

TAGS: individuals | tax | mining | audit | Albania | oil and gas | tax authority | Canada

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