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Libya oil sues Kobil Ethiopia for VAT refund

Libya Oil Ethiopia Ltd, which became operational in Ethiopia upon acquiring the shares of Shell Ethiopia on May 2009, filed a lawsuit on Monday at the Federal High Court Seventh Civil Bench at Lideta claiming 8,773,051.19 Birr from Kobil Ethiopia Limited for the refund of the said amount being VAT paid to the Ethiopian Revenues and Customs Authority (ERCA) on the assets sold to the later by Shell Ethiopia. Libya Oil filed the suit on summary procedure.

On the statement of claim written on May 23, 2011, Libya Oil states that, Shell Ethiopia Limited and the defendant Kobil Ethiopia Limited have signed an addendum on May 3, 2007 for the agreement made between the two parties on February 06, 2007 for the sale of assets in which sixty-three stations are acquired by Kobil. According to the claim, Kobil has agreed to pay a Value Added Tax (VAT) to the ERCA if the authority decides to tax the transaction between the two or to refund Shell Ethiopia if it effects payment.

The former Federal Inland Revenue Authority has informed Shell Ethiopia on April 19, 2007 that the transaction between the two parties to acquire assets is VAT exempted which makes it fall under the zero rate transaction, the claim states.

The claim also states that the ERCA served Libya Oil on November 17, 2010 with a VAT assessment notification which shows its decision to make the transaction between the two parties is vatable. The ERCA requested Libya Oil to pay 12,946,903.38 Birr VAT.

Libya Oil carried out its responsibility as per the addendum agreement by notifying ERCA’s decision which makes the transaction vatable, the claim added. Because Kobil refused Libya Oil’s request either to settle payment or appeal ERCA’s decision or to make Libya Oil to appeal on its behalf it negotiated with ERCA and paid 8,773,051.19 Birr, Libya Oil alleges.

The claim states that, though Libya Oil repeatedly requested Kobil Ethiopia to refund the amount it paid to ERCA according to the addendum agreement it informed Libya Oil on a letter written on May 4, 2011 that it has no basis to refund any money paid by Libya Oil’s own volition to the ERCA.

Libya Oil requested the court to order Kobil Ethiopia to refund the stated amount of money and also provided the addendum agreement signed between Shell Ethiopia and Kobil Ethiopia and many other letters and e-mails made between the two parties as evidence.

The court which is presided over Judge Muluken Teshale ordered the defendant Kobil Ethiopia to provide a waiver within 10 days if it desires to defend and adjourned the case for June 21.

Libya Oil, owned by the Libyan government and registered in Mauritius, became operational in Ethiopia upon acquiring the shares of Shell Ethiopia on May 20, 2009 and has five major shareholders: Libya Oil Holding Ltd and Tamoil Africa Holding Ltd as well as three Libyan individuals named Sultan Abusahawashi, Saleh Saad Abdall, and Abadulsalah Yuneus.

Source: Ethiopia Times




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