Transocean Clarifies Status of Norwegian Tax Dispute
Transocean Inc. (NYSE:RIG) today clarified the status of the previously disclosed pending Norwegian tax dispute in response to certain reports being circulated in Norway. In particular, a lower court in Norway ruled against the position held by two of the Company's former subsidiaries on a procedural point related to an ongoing criminal investigation by Norwegian tax authorities in which neither the Company, nor its subsidiaries has been charged. We continue to cooperate with Norwegian authorities and intend to appeal the lower court's ruling on the procedural point.
The court's ruling focused only on the issue of the extent of the attorney/client privilege under Norwegian law relating to certain documents seized from the office of these subsidiaries' legal adviser in a criminal investigation. The issue relates to whether the Norwegian prosecution authorities are allowed to release those seized documents to Norwegian tax authorities in connection with the ongoing tax dispute.
The ruling is not expected to have any direct implications on the substantive issues in the criminal investigation, nor on the possible reassessment of the tax liability of these subsidiaries. We believe that these subsidiaries' tax filings were legal and proper, these subsidiaries and their employees acted appropriately, and we plan to vigorously contest any assertions or assessments by the Norwegian authorities.
As previously disclosed in our filings with the Securities and Exchange Commission, we received notice in April 2006 from the Norwegian tax authorities regarding their intent to propose adjustments to taxable income for the tax years 1999, 2001 and 2002. The Norwegian tax authorities initiated inquiries in September 2004 related to the restructuring transactions and a separate dividend payment made during 2001. In February 2005, we filed a response to these inquiries. The proposed assessments could result in an increase in our tax liability of approximately $260 million plus interest, and the authorities further indicated they intend to impose penalties, which could range from 15 to 60 percent of the assessments. The anticipated assessments relate to restructuring transactions undertaken in 2001 and 2002. We continue to respond to information requests from the Norwegian authorities and filed a formal protest to the proposed assessment in June 2006. We also believe that the Norwegian authorities are contemplating a tax assessment of approximately $100 million on the dividend, plus interest and a penalty, which could range from 15 to 60 percent of the assessment. Norwegian civil tax and criminal authorities continue to investigate the restructuring transactions and dividend.
Manages 53 Offshore Rigs
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