Transocean Ltd may face another $473 million in potential U.S. back taxes, according to its annual regulatory filing, in which it also said a judge partly cleared the company in a similar tax dispute dating back eight years.
The company, owner of the world's largest offshore oil rig fleet, said the latest assessment received this month for 2008 and 2009 related to accounting between subsidiaries, for both engineering services performed between them and transfer pricing for rig charters.
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"If the authorities were to continue to pursue these positions with respect to subsequent years and were successful in such assertions, our effective tax rate on worldwide earnings with respect to years following 2009 could increase substantially," said Transocean, which booked an overall 2011 income tax expense of $395 million.
The $473 million of proposed adjustments exclude interest, but the company said in the filing released this week that it believed its tax returns were correct and planned to defend against the claims.
The company declined to comment further on Wednesday.
Paying taxes is an especially big issue for rig contractors, since most their assets are not fixed in one place.
Following President Barack Obama's 2008 election, Transocean moved to Switzerland from the Cayman Islands to secure a low-tax domicile. Noble Corp made the same shift soon after, and Ensco Plc then went to Britain in a move that Rowan Cos Inc said on Tuesday it would mimic.
In Norway last year, authorities indicted two Transocean-owned companies and some advisers over suspicions of tax fraud, alleging underpaid taxes of up to $1.8 billion.
The company has also faced other U.S. tax disputes in the past, including claims related to transfer pricing in 2004, though Transocean said a U.S. tax judge ruled in its favor on Jan. 12 in that case and the adjustments were withdrawn.
The U.S. tax authorities also withdrew previously proposed adjustments for 2005, apart from about $50 million related to rig charter transfer pricing between its subsidiaries.
The company is still fighting a 2010 U.S. tax assessment of $278 million for 2006 and 2007 involving the same two issues relating to accounting between units, as well as about $295 million related to capital gains adjustments for 2006 to 2009 and a total of $248 million more for witholding taxes and penalties. (Reporting by Braden Reddall in San Francisco; Editing by Bernard Orr)
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