The British company Sound Energy has indicated that it has received from the Moroccan tax authorities the notification of a 100% reassessment of its recovery concerning its subsidiary Sound Energy Morocco East Limited (SEME), for taxes and duties of the period 2016-2018, in accordance with the tax audit carried out in 2020.
According to the initial assessment by the Directorate General of Taxes, this reassessment is justified by the various historical changes contained in the notification relating to the exploration permit of Tendrara Lakbir and the transfer of Sound Energy Morocco East Limited (SEME).
In response to this situation, Sound Energy said in a statement that “the tax administration sought to justify this tax claim by arguing a so-called acquisition of intangible assets.”
In addition, the tax department announced the decision of the Local Tax Commission which found that SEME’s charges relating to the free acquisition of intangible assets had been dropped.
As a complaint had been filed by management against SEMS, the commission considers that taxing the same transaction twice would be superfluous, the company said, adding that the commission did not drop the charges relating to the assessment by the tax administration an alleged sale of assets by SEME to Schlumberger as part of the conclusion of a brand new oil agreement for the exploration of the great Tendrara.
“The tax administration’s assessments result from a fundamental misunderstanding of historic license changes (waiver of old licenses and entry of new licenses covering revised acreage with revised conditions – without continuation or transfer of the original license ) and intergroup participations outside Morocco”.
“Sound Energy remains firmly convinced that the remaining charges, including that against SEME for entering into the new Grand Tendrara oil deal, have been misinterpreted by the Moroccan tax administration. The Company, together with its advisers, continues to seek to engage constructively with the authorities,” the British company’s statement concludes.
At this time, no information on the amounts required. Sound Energy has 60 days from receipt of the commission’s decision to accept or challenge it in court.