4 Sep 2015

Oil industry in $71m tax standoff

12:00 pm on 4 September 2015

The New Zealand oil industry is engaged in a $71 million standoff with the Customs Department over excise duties dating back to 1986.

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The case, which became public because Z Energy is listed on the NZX, concerns all major oil companies in New Zealand. Photo: RNZ

Z Energy said it was talking over this matter with Customs but said it could take legal action if it needed to.

The duties concern refined fuel that gets fed down the pipeline from the refinery at Marsden Point to a huge oil terminal at Wiri in Auckland.

The terminal takes 40 percent of all New Zealand's petrol.

The claim from Customs concerned fuels that were accidentally mingled in the pipeline during transit.

Z Energy said duty had already been paid on that fuel and the department was seeking a second grab.

Customs officials could not be reached for comment.

The case concerned all major oil companies in New Zealand but became public only because one of them, Z Energy, was listed and had to tell the stock exchange.

The company's chief executive Mike Bennetts said the claim would hit its balance sheet.

"If this was to be a tax that we had to recover, say for the rest of our financial year, it's about the equivalent of six cents a litre for the next seven months.

"We think that's pretty steep, and it really does relate to, sort of, 30 years of taxes and penalties that go back beyond the date that any of us thought there was an issue here."

Mr Bennetts said the department's action was extremely disappointing.