20 February 2023 Ampol Limited announced entering a $157 million tax settlement agreement with the Australian Tax Office in a dispute over pricing of transactions between Ampol Limited and the group’s Singapore procurement hub.
Ampol is an Australian based petroleum distributor and retailer, with more than 1,900 Ampol-branded gas stations across the country.
Ampol Singapore was established in late 2013 and is the trading and shipping arm of the Group.
According to an announcement issued by Ampol, the settlement relates to financial years ended 31 December 2014 to 2022, as well as agreement on the treatment of future earnings. As a result of the settlement:
- Ampol will pay a further $5.6 million in Australian tax on earnings between 2014 and 2021, and $0.1m in interest. This is in addition to the $104.1m of tax already paid on Ampol Singapore earnings, in relation to these matters, on lodgement of the tax returns for the affected years;
- In June 2023 Ampol will pay $48.2 million in Australian tax on Ampol Singapore earnings in the 2022 financial year, reflecting the agreed position on these matters, in line with normal tax payment dates;
- Ampol has written back excess current tax liabilities and deferred tax assets recognised between 2014 and 2022 in accounting for the full amount in dispute, with this write-back resulting in a one-off benefit to corporate tax expense in 2022 of $110.2 million, recognised as a significant item;
The settlement covers the transfer pricing outcomes of transactions between Ampol Singapore and Ampol Australia as well as how Australia’s CFC regime will apply to the profits of Ampol Singapore.
According to an announcement issued by the ATO, the tax authorities has had a strong focus on offshore procurement hubs. Broadly, under these models, an offshore entity of the multinational group (the procurement hub) is used to procure goods from third party suppliers and in turn on-sell those goods to the local distributors of the group. The procurement hub is typically located in a low or no tax jurisdiction.
“We are keen to ensure that procurement hubs are not used as a mechanism to shift profit from Australia by charging excessive prices for imported goods and services in an effort to reduce tax paid in Australia.”