In a unanimous decision, the Federal Court of Australia Full Court has dismissed Chevron’s appeal against the preliminary Federal Court’s decision to require a payment of over $300 million. The Court found that Chevron had engaged in illegal transfer pricing with offshore companies as a means of decreasing their tax obligations. The dealings undertaken by Chevron were said to be internal refinancing not beyond ‘arm’s length’ and thus in breach of transfer pricing provisions under federal taxation law.
The Court’s decision coincides with federal legislative reform with regards to corporate taxation and concessions. The precedent emerging from the decision will have implications for a separate and ongoing Chevron loan, supporting development in the north-west gas shelf of Western Australia, which is using similar debt financing strategies to offset tax burdens.
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