Oil company seeks tax dispute mediation

Bankers Petroleum announced on Monday that the National Agency for the Management of Natural Resources in Albania had agreed with the idea of holding an independent evaluation of its investments as part of efforts to end the tax dispute.

“In the next few weeks, the parties will select international auditors and hope to arrive at a conclusion about this issue. This initiative is expected to resolve the [tax authorities’] estimate of $57 million in tax balance,” the company said in a press statement.

Bankers, which had total revenues of 54.4 billion leks (388.6 million euros) in 2014, and is the biggest corporation in the country, has been accused for years of transferring profits outside the country by inflating its investments through related companies registered offshore in order to avoid Albania’s 50 per cent profit tax.

Its balance sheet shows that at the end of 2014, it had 13.3 billion leks (95 million euros) in accumulated negative profit tax.

The Albanian tax authorities tried to challenge this and disputed about $57 million in expenditures. Bankers then said that it would seek an independent audit.

Canada-based Bankers started working in Albania in 2004 on a concessionary agreement to use modern technology to exploit petroleum reserves. Over the years, it managed to benefit through high oil prices which turned it into a giant worth $2 billion at its height just before the international financial crisis of 2008.

However, the sharp drop in oil prices since August 2015 hit its share prices in the Toronto Stock Exchange. Its shares currently trade at about $1.90, down from over $6 in October 2014. Its revenues from its operations in Albania were down to $170 million for the first six months of 2015, half as much as the previous year.

The standard concessionary agreement for oil extraction in Albania provides the government with the right to tax 50 per cent of the net profits. Unable to collect the profit tax, Albania then introduced a 10 per cent royalty tax over natural resources exploitation in the country.

Balkan Insight,  20.09.2015