PERTH (miningweekly.com) – US oil and gas major Chevron could face up to A$250-million in back taxes and up to A$60-million in fines after the major lost a Federal Court appeal on Friday.

The Australian Taxation Office (ATO) last year alleged that Chevron had, between 2004 and 2008, used a series of loans and related party payments worth billions of dollars to decrease its tax bill by up to A$258-million.

The case related to a loan agreement between Chevron’s US and Australian entities, following a merger with Texaco. The ATO alleged that Chevron Australia had incurred a A$2.5-billion debt to create “the most tax efficient corporate structure” and claimed that the Chevron-created entity in Delaware had operated for the sole function of lending money to the Australian subsidiary.

In addition to the back taxes and fines now faced by Chevron, the ATO could also issue a bill to Chevron to cover the government’s legal costs. The parties had 21 days to agree to the exact amount owed by Chevron.

Chevron has reportedly said it was considering an appeal of the decision.

Meanwhile, the International Transport Union’s Federation (ITF) has welcomed the Federal Court decision, with president Paddy Crumlin saying Chevron needed to come clean and pay its fair share of taxes.

“This demonstrates the complete disregard Chevron has for Australia and the lengths it will go to to avoid its obligations.”

Crumlin noted that the ATO is now examining a similar A$35-billion Chevron tax scheme.

“In light of this decision, this audit is now the most important the ATO has ever undertaken. With liquefied natural gas exports expected to triple in the next few years, it is critical that tax authorities and governments take a very close look at how Chevron structures its tax arrangements,” he added.

“Billions of dollars of tax revenue could be lost to the Australian people unless the government takes an aggressive approach to major tax minimisers like Chevron,” Crumlin said.