Bulgarian Customs Agency Inspects Lukoil on Suspicions of Tax Evasion

Business » ENERGY | August 22, 2011, Monday // 13:24
Bulgaria: Bulgarian Customs Agency Inspects Lukoil on Suspicions of Tax Evasion Customs Agency head Vanyo Tanov has launched a challenging tax evasion probe at Lukoil. Photo by BGNES

Bulgaria's Customs Agency is checking whether Lukoil Neftochim is being siphoned off by its subsidiary Litasco, which controls volumes entering and exiting the oil refinery.

The announcement was made Sunday by Customs Agency head Vanyo Tanov in interview for the Bulgarian National Radio (BNR).

He explained that Litasco was an intermediary company registered in Switzerland.

As Litasco had been tasked with determining both crude oil prices and prices of exported end-products, Tanov noted, it was possible that the Swiss-registered firm accumulated the profits, leaving Lukoil to report losses.

He also made it clear that the investigation would be further complicated due to the registration of the company.

"The chain is broken and we cannot execute any checks as the output is mainly exported to offshore zones and we cannot say whether these are real transactions and whether real payments are being made between Litasco and the offshore companies", Bulgaria's Customs Agency head argued.

Tanov also informed that Lukoil Neftochim had not paid a single lev in direct taxes over the past two years because it reported losses, while the excise duty and VAT contributions of the firm were actually paid by consumers.

He further suggested that the Burgas-based refinery would manage to install 80% of the required measuring devices by end-October.

Tanov explained that the upgrade of oil terminal Rosenetz would be more time-consuming and would require bigger investments, meaning that the company would probably comply with all requirements under the Excise Duties and Tax Warehouses Act by the middle of 2012.

"They have put great efforts into the task over the past month; if they had done that a year and a half ago, there would not have been any problems", he concluded.

The Customs Agency Director also noted that the additional investments in the new equipment should not drive up end prices of gasoline.

Regarding Interior Minister Tsvetan Tsvetanov's statement that the suspension of the refinery's license constituted a threat to Bulgaria's national security and the reported liabilities of the Interior to to Lukoil Neftochim, Tanov said that the state must not be left to run up debts to any company or to depend on a sole monopoly player.

"When the refinery closed, it turned out that the Bulgarian State Railways BDZ and the airline operators were dependent on one company - a situation which is inadmissible in view of preserving Bulgaria's national security. In this case, a breakdown could place the entire transportation sector on a dead-end street", Tanov stressed, suggesting that the state should distribute public procurement contracts and prevent monopoly.

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Tags: Lukoil, Lukoil Neftochim, Vanyo Tanov, Customs Agency, Customs Agency head, tax evasion, excise duties, Excise Duties and Tax Warehouses Act, direct taxes, Litasco, oil refinery
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