Siem Offshore refuses to pay penalty for alleged tax fraud scheme

Økokrim, The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime, has today levied a fine  to Siem Offshore Inc. of NOK 10 million for alleged violations of Norwegian tax legislation following the indictment which was reported in August 2013.

According to a statement issued by Siem Offshore, Økokrim also want to reclaim NOK 2.5 million in an alleged saved guarantee fee related to exit taxation.

Siem Offshore says it disputes Økokrim’s findings and finds them “unjustified, particularly in relation to the claim that the company has wilfully sought to defraud tax.”

Furthermore, Siem Offshore, a Norway-based owner of offshore vessels, said it has resolved not to accept the fine, which means that Økokrim will have to decide whether to press charges in a normal court procedure.

Siem says that the fine relates to failure to deliver a Norwegian tax return for the tax years 2005-2007 and for ticking the wrong box in the tax return for 2008 in relation to exit taxation following a renegotiated contract structure for the company’s vessels operating on the Norwegian continental shelf.

“With respect to the non-delivery of tax return for 2005 to 2007 this relates to a misunderstanding from the Company and its advisors with respect to the Company’s obligation to limited taxation for operations of certain vessels on the Norwegian continental shelf during these tax years,” reads a statement by Siem Offshore.

“The Norwegian tax authorities wrote to the Company about this issue in 2008, upon which the Company filed the tax returns and paid the outstanding tax and interest. Thereafter the tax authorities sat on all relevant information for five years before reporting the matter to Økokrim last year.”

“No tax has been outstanding in the matter for several years. Had the Company been alert to the tax obligation, the vessels would have been put into the ordinary Norwegian shipping taxation regime, which would have resulted in zero taxation.”

“As a result of this mistake the Company has paid NOK 75 million more in tax than it otherwise would have had. The Company therefore cannot accept that this failure to deliver tax returns can be perceived as a scheme to criminally defraud taxation. With respect to the issue regarding the exit taxation in 2008, the Company had at the time of filing the tax return in July 2009 decided to move its tax residency to Norway, which meant that any tax liability relating to the exit of vessels would be extinguished.”

“This has been accepted by the tax authorities. The Company can therefore not accept that the wrong tick in the box can be seen as a wilful or grossly negligent act made for the purpose of defrauding tax. The Company thus disagrees with Økokrim’s assessment of the evidence. The Company is also of the view that Økokrim’s application of the law in relation to the exit taxation issue is incorrect. The Company looks forward to a fair, balanced and objective procedure in Court based on the full evidence and proper contradiction,” Siem concluded.