Bulgaria Customs Agency to investigate Lukoil refinery

Written by on June 1, 2015 in Business - Comments Off on Bulgaria Customs Agency to investigate Lukoil refinery

Bulgaria’s Customs Agency has started an audit of the Neftochim oil refinery, owned by Russian oil conglomerate Lukoil, to investigate claims that the company was dodging taxes, private broadcaster Nova Televizia reported on June 1, quoting the agency’s executive director Vanyo Tanov.

The audit was prompted by claims made last week by Risk Management Laboratory, a think-tank chaired by former prime minister Ivan Kostov, which alleged in a report that the refinery has dodged taxes worth 1.15 billion leva, or about 585 million euro, from crude oil price differential alone.

Tanov said that a similar audit should be carried out by the National Revenue Agency, followed by an independent review of the two investigations. “Only then can Kostov’s thesis be proven or disproven; it is impossible to reach a conclusive verdict with data from just one of those institutions,” Tanov was quoted as saying.

The report by Kostov’s think-tank does not challenge the amounts of crude oil imported by the refinery or the amount of tax paid on it, but focuses instead on the price of crude used in the tax paperwork. The report claims that Lukoil used the average price of Brent crude instead of the cheaper Urals crude, which was the type of oil used by the refinery.

By artificially increasing the price of oil and transportation costs, Lukoil generated large profits for its trading subsidiary outside Bulgaria and the retail subsidiary in the country, while ensuring that its refining arm in Bulgaria operated at a loss, thus paying no corporate taxes, the report claimed.

Lukoil has denied the claims, saying that the report used incorrect data and interpreted it erroneously, threatening to sue the think-tank for damaging the company’s reputation.

(Lukoil Bulgaria petrol station photo: sociate/flickr.com)

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