The Erawan oil rig in the Gulf of Thailand is operated by Chevron. A reinterpretation of oil transported from the mainland to offshore rigs by the Council of State may cause tax liabilities for the oil firm.
The Customs Department is considering the tax liabilities Chevron Thailand Exploration and Production must pay after the Council of State decided oil transported for use on its rigs located farther than 12 nautical miles offshore should be counted as a domestic purchase.
The department is calculating how much tax will be retrieved from the petroleum explorer as Chevron claimed tax refunds during two periods -- between March 2011 and March 2014, and February 2015 and October 2016, said Kulit Sombatsiri, director-general of the department.
Chevron purchased oil and transported it to its petroleum rigs, located on a continental shelf that is farther than 12 nautical miles from the coast. It claimed a refund of excise duties worth 3 billion baht from Customs, which took responsibility for collecting tax instead of the Excise Department, claiming such transactions were considered exports.
Mr Kulit took an interest in Chevron's tax refund case because he believed such transactions should not be counted as exports. The issue involves the country's sovereignty rights and state officials hold two differing opinions on the matter.
In 2010, the Customs Department's committee tasked with considering tax issues considered a request by PTT Exploration and Production, which sought clarification on whether oil transported to rigs located farther than 12 nautical miles offshore should be viewed as exports. The committee determined they should be considered exports.
The UN Convention on the Law of the Sea defines the territorial boundary as 12 nautical miles beyond the coastline. However, the Supreme Court earlier ruled that the territory extends to the continental shelf.
Chevron's executives could not be reached for comment.
However, a source who asked not to be named said the company has only seen media reports. It has not yet seen any official notice from the Council of State.
"Our company has complied with Thai law since starting operations here," said the source.
Mr Kulit said the Council of State's interpretation seemed to be setting a practical guideline for all Customs officials to apply.
An informed source at the Finance Ministry said the fact-finding committee on Chevron's tax refund chaired by Inspector-General Lavaron Saengsanit is expected to complete its investigation within this month into whether state officials involved in the case performed their duties honestly.
Before the Customs committee decided shipping oil to petroleum rigs located more than 12 nautical miles offshore was an export, Customs officials determined such transactions are domestic purchases, which are subject to excise tax, contributions to the Oil Fund and value-added tax.
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