New Zealand Customs Face Off with Oil Industry

September 4, 2015 Taxation in New Zealand

WELLINGTON – The oil industry in New Zealand is facing a tax bill of NZD 71 million for almost 30 years of allegedly unpaid tax.

On September 4th Z Energy, a New Zealand petrol company, issued a new statement confirming that the New Zealand Customs Service is pursuing as much as NZD 71 million back-taxes from a fuel terminal operation co-owned by four national petrol companies.

Currently Customs New Zealand collects excise duties on all petrol leaving refineries, prior to the petrol being pumped away for distribution.

As there is only one major pipeline leading away from the main refinery in the country, the pipe is used to also carry diesel and jet fuel.

The pipeline generates a small amount of waste product referred to as “slop”, which can be extracted and later commingled with other fuels in order to marginally increase the net amount of petrol which can be sold to consumers.

In its statement Z Energy claimed that the use of such slop is a global practice, and no efforts have ever been made to obscure such practices from consumers or Customs officials.

However, the New Zealand Customs Service is now seeking to collect the excise duties which have been derived from the slop from as far back as 1986.

The total tax bill could be as high as NZD 71 million, to be allocated between the four major petrol companies based on their respective portions of the petrol pumped through the pipeline.

Photo By: Maureen