Gabon tells French Total oil company to pay $805 million in back taxes

Gabon’s government has told French oil major Total’s local subsidiary to pay $805 million in back taxes from 2008 to 2010, in a case watched closely by potential new investors in the West African country’s energy sector. However, Total Gabon said it would challenge the tax demand, which follows a state audit of the former OPEC member’s petroleum industry that began in 2010.

The company said it “considers this tax adjustment unfounded” and was confident that discussions with the government would yield an outcome in its favor. Currently, the government is restructuring its vital energy sector as it tries to double output to 500,000 barrels per day.

In a similar situation, an earlier tax dispute with Addax Petroleum, a subsidiary of China’s Sinopec, led that company to pay the government at least $400 million. A senior official in the Ministry of Petroleum, on condition of anonymity, advised that other companies will be subject to similar tax audits.

Total is the oldest foreign petroleum company in Gabon and owns 58.28 percent of Total Gabon, with the Gabonese government owning around 25 percent. According to one industry source, the government’s holding was likely to help speed a resolution to the dispute.

The government has also argued that Total’s rejection of its tax demand was proof of bad faith. “The administration deplores (Total’s) attitude, characterized by a tendency to pay attention only to one’s point of view,” Gabon’s director general of taxes, Joel Ogouma, said in a statement sent to Reuters on Friday but dated Thursday.

Ogouma went on to say, “The authorities regret the bad faith of Total Gabon which, despite its size, remains a taxpayer like any other, subject to the laws and regulations of the Gabonese Republic.”

Source: The Africa Report