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Gabon Tells Total to Pay $805m in Taxes

Source: Reuters 2/21/2014, Location: Africa

Gabon's government has told French oil major Total's local subsidiary to pay $805 million in taxes it owes for 2008 to 2010, in a case watched closely by potential new investors in the West African country's energy sector.

Total Gabon said it would challenge the tax demand, which follows a state audit of the former OPEC member's petroleum industry that began in 2010.

The company said it "considers this tax adjustment unfounded" and was confident that discussions with the government would have a favourable outcome.

The government is restructuring its vital energy sector as it tries to double output to 500,000 barrels per day.

An earlier tax dispute with Addax Petroleum, a subsidiary of China's Sinopec, led that company to pay the government at least $400 million.

Other companies will be subject to similar tax audits, a senior official in the Ministry of Petroleum told Reuters on condition of anonymity.

Total is the oldest foreign petroleum company in Gabon and owns 58.28 percent of Total Gabon, with the Gabonese government holding 25 percent.

One industry source said the government's holding was likely to help speed a resolution to the dispute.

The government said Total's rejection of its tax demand was proof of bad faith.

"The administration deplores (Total's) attitude, characterized by a tendency to pay attention only to one's point of view," Gabon's director general of taxes, Joel Ogouma, said in a statement sent to Reuters on Friday but dated Thursday.

"The authorities regret the bad faith of Total Gabon which, despite its size, remains a taxpayer like any other, subject to the laws and regulations of the Gabonese Republic," Ogouma said.

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