By Delphine Strauss in Ankara
Published: March 5 2009 02:45 | Last updated: March 5 2009 02:45
Sales of duty-free petrol to truckers crossing Turkey’s borders with Greece and Bulgaria have landed BP’s local unit with a tax fine of 474m Turkish lira ($275m), the oil group confirmed on Wednesday.
BP, which was notified of the fine late on Tuesday, said it would “pursue all avenues” to overturn it, including appealing against it in court or seeking a settlement with the tax authorities.
The total of TL474m includes back taxes, interest and penalties.
BP claims to be one of the largest foreign-owned investors in Turkey, operating the country’s second-biggest chain of petrol stations as well as the Baku-Tblisi-Ceyhan pipeline carrying Azeri crude oil to the Mediterranean.
Murat Lecompte, BP’s spokesman in Istanbul, said the fine related to petrol sales by a dealer named Bilnam that BP supplied between 2006 and 2008, operating in the duty-free area next to the borders where many trucks stop to refuel.
Trucks entering Turkey have to pay special consumption tax and value-added tax if they buy more than 550 litres of fuel.
The measure is intended to stop smuggling, a perennial problem in Turkey where petrol taxes are among the world’s highest.
The finance ministry claims the 550-litre limit also applies to trucks leaving Turkey, whereas BP contends that because of a policy of promoting exports the regulations set no limit and outbound trucks can fill up tax-free – reclaiming VAT afterwards.
It is the second time in a month that Turkey’s finance ministry has imposed a tax fine running into hundreds of millions, and comes while controversy is still raging over a penalty of TL826m levied on the Dogan media group, which is now in open conflict with the government.
But Turkey badly needs to boost tax revenues in a year when it will be hard hit by the slump in economic activity.
It will also be required to improve tax collection if it wants to seal a new financing package with the International Monetary Fund.
But the finance ministry’s zeal in pursuing corporate taxes contrasts with prime minister Recep Tayyip Erdogan’s public rejection of measures he said the IMF had demanded to clamp down on income tax evasion.
Mr Lecompte said the fine, levied on BP rather than Bilnam, had taken the group “totally by surprise” and that it felt applying the 550-litre limit retrospectively was a misinterpretation of the regulations.
Copyright The Financial Times Limited 2009
Source: www.ft.com, March 5 2009
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