Petrobangla, Chevron at loggerheads over payment of Tk 300m 'tax on tax'

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Doulot Akter Mala
State-owned Petrobangla and US-based oil company Chevron are at loggerheads over payment of Tk 300 million as 'tax on tax' to the national exchequer.
The Chevron, which took over from Unocal in 2006, paid the amount as tax-on-tax over the past three fiscals. The company has been saying that the Petrobangla should pay such tax on its behalf, the Petrobangla sources said.
According to existing provision, the government charges such tax on the amount of tax paid in previous year along with current year's income.
Recently, Petrobangla Chairman Sheikh Abdur Rashid requested the government to give a specific guideline in accordance with the income tax law to resolve the issue.
He has sent a letter to the board in this connection.
In the letter, the Petrobangla Chairman said: "As per the production sharing contract (PSC), the Petrobangla has been paying corporate tax on behalf of Chevron, which is charged on income and profit on petroleum operations."
The PSC is a special agreement between the government of Bangladesh and foreign contractors signed mainly for petroleum exploration and development in the country.
The Chevron started commercial gas production from the Jalalabad and Moulvibazar gas fields in February 1999 and June 2006 respectively.
After cost recovery of the investment, the profits of petroleum operations are shared by the Petrobangla and Chevron as per agreement, it noted.
The state-owned oil and gas company said there is no scope for relating the issue of 'tax on tax' with the petroleum operations-related income.
In the letter, the Petrobangla Chairman termed the amount of tax paid as 'admitted liability' and 'other income' of Chevron.
While contacted, a senior Petrobangla official said: "The company has been paying corporate tax at a rate of 37.5 per cent on behalf of Chevron since 2004-05."
He, however, claimed that the amount of tax paid is taxable