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You still said your instead of you are in the first line. Why is this so difficult for you to grasp? If you cannot get your head around this please do not attempt taxation :)
I am not little I am 6ft 3.
I said I do not trust any African Government
Don’t let your blood boil to much in this heat
Not sure why your worried KTF has already told us that Sound have TAX EXPERTS who will sort this out for the company. These are not the same experts that lost the first case these are better experts Rodney.
Could it be that the Moroccan tax authority have let Sound win this one to save face with the Moroccan people only to allow the later appeal. If there is an appeal. That might keep the people happy and Sound investors happy Or could it be that they will pursue the claim to the bitter end knowing if they win this one the 22.5 million claim will be won as well. Then the bank can liquidate Sound take over operations and the Moroccan royal family indirectly will own 25% of Sound. As Joe Creed or Ericnat said all of the African regimes are crooked. Joe you are a nasty little man. Hopes this shows i am willing to learn (you are) Anyway enjoy your (hope this is correct) Sunday lunch all and don`t worry too much about the second scenario. Nice acquisition for the Alawi dynasty.
Hi Job
Yes I have emailed Friday evening.
Funny I thought that. Create uncertainty then a low low offer with investors thinking that’s it I’m off.
WoundLick, I’m more worried now , as I think we are not wanted & others want full control of sound with the micro / pipeline / drilling coming soonish , time will tell
Gla
Have you emailed again Eric?
Hopefully they’ll make it clearer next time.
The RNS stating some of the TAX was resolved came out before the financial report. So on the face of it, looks like Fern is correct 2.5 plus a potential 22.5. That is a shame because I thought the 14 million was the maximum extra. Let’s see how the company responds to emails requesting clarification.
I don't recall which RNS it was in but I remember they dropped part of the tax claim.
Fernan - if that is from the 2021 figures could it have not been subsequently resolved?
Seems unclear - but the message I received was quite clear that it was only the $2.55m……
remember the 1.5 per tcf jargon? seems they have inherited the love of confusing PIs.
Hi Fern
So 2.5 million plus a potential of another 22.5 million.
To be frank I thought it was 2.5 million with a potential of another 14 million. Well I will be happy when we know for sure. Then we can at least hope for the best but prepare for the worst.
It seems that the current status of the tax claims is the following:
SEME subsidiary: There is liability of US$ 2.75 million that has been confirmed both by the Local Tax Comitee (LTC) and a court. The company is currently appealing the judge decision.
SARL AU: the company has a contingency of US$ 22.5 million, with the following breakdown:
- Value Added tax and witholding taxes: US$ 22.2 million
- penalties: US$ 0.3 million
The company has appealed these claims to the Local tax commitee (LTC), which has up to 12 months to make a decision.
See note 8 to 2021 Annual financial statements
Regards
ericnat, I hope you are right. There's no doubt in my mind that if Morocco makes the tax charge "stick" that Sound Energy Plc will be liable for it -- they can't evade it just because SEMS is a dormant subsidiary. SOU's case, of course, is that there wasn't a transfer of ANY assets, not even intangible ones. The license relinquished by SEMS was a different one to the one obtained by SEME (Tendrara Lakhbir exploration permits vs. Greater Tendrara exploration permits). To my limited understanding, that always looked like a reasonable case. And even were it not, surely a company gets taxed on its *profits*. SOU made no sort of capital gain on these transactions and has had no production revenue. The best summary is probably still the RNS from June of last year:
https://markets.ft.com/data/announce/full?dockey=1323-14998057-7A0VEIVDU4UKCU6KCA011A5JRH
Hi Fern
Yes time will tell. I hope that you are right that we are not liable. If we find out we are liable then it certainly seems that the senior sound team have been using legal ease and semantics to try to limit exposure.
But I need to understand why it is in the RNS and I have been given a different response. Maybe it is the way I asked the question?
Maybe.
MS made a clear diferentiation of the effect of each claim on company´s operations and cash flows. There should be a reason for that.
Time will tell.
Sorry Fern
But I think one lead to the other. The TAX authorities have lodged this claim and Sound energy are fighting it. For me I think that is pretty clear that Morocco Tax authorities think that Sound Energy PLC are liable for the the Claim.
I was not talking about the reason for the tax claim...because I don´t know exactly what are the basis for it (I think nobody here knows)
I was talking about the eventual responsability of related companies within the same group, when one dormant subsidiary with no assets is charged with a tax obligation.
Fern…And now you have got it….for the RNS about the transfer on intangible assets from the dormant to the active. This is what the tax charge is all about
In addition to the Remaining SEME Charges, the Moroccan tax claims against Sound Energy Morocco SARL AU ("SEMS") related to the Tendrara Lakbir Exploration Permits and the transfer of Operatorship from SEMS to SEME (the "SEMS Claims") remain in due process. Under the SEMS Claims the Moroccan Tax Administration purports a so-called disposal for nil consideration of intangible assets by SEMS to SEME.
Maybe SARL AU never had assets. It´s only "asset" was an exploration license that was relinquished, originating the current tax claim. In that case, I don´t know if the moroccan tax authority will have the right to pursue other SOU´s subsidiaries, in order to receive the amound due by SARL AU.
Regards
PS
This is part of the problem, GL is trying to clear up the mess left by the previous team. I don’t think the change of corporate structure was to avoid tax….it just appears that it was. Mistakes were made and now they are all coming home. It is not going to be a big issue it’s just some thing to deal with.
If assets transferred from a dormant to an active then tax liability also moves. This is relatively common in most tax jurisdictions.
If the tax is legitimately due you have to wonder what sort of advice SOU were getting, and indeed why they needed to monkey around with the corporate structure. I noticed that SEMS is registered in Rabat while SEME is registered in London. Did the Moroccans get antsy because of a perception that SOU was trying to move assets to a different jurisdiction? I've no idea, just wondering out loud.
I don´t know the moroccan tax legislation, nor the local rules about liabilities.
But, if the SARL AU subsidiary is a limited liability company, with neither assets not operations, there is a chance that the moroccan tax authority will have no assets no take in order to make good the tax claim. It´s likely that the tax claim was raised by the state after the company got "dormant".
Maybe that´s what MS tried to say in the Q&A session.
Unless, of course, the moroccan legislation gives the state the right to pursue other companies within the same group, in order to receive the amount due by SARL AU.
I don´t know. It all depends on the specifics of the moroccan tax laws.
But I´m sure MS had something in mind when he said that.
Regards
Yes I have listened to the Q&A several times. He does not say that we are not liable for the 14 million….he just says that it want affect the cash flow of the the current operator company. Again very carefully chosen words. It will affect the liabilities of the Sound Energy PLC.
It appears that we have a bit of confusion about how company finances work. I have asked Sound for some clarification. But hopefully we can agree on one thing the 2.5 million is only one issue. We have a second Tax issue that is clearly mentioned in the Latest RNS. I just want it to be Clear now so we do not get a shock when the next one lands , it is priced in. That’s try and get that mentality fixed…..otherwise…
Sorry Fernam
If it was as easy as that to get out of a TAX claim don’t you think that everyone would be making their companies Dormant. The RNS is clear and I spoke to the one of the presenters at the AGM and he confirmed the status as I have described. The initial presentation did mention approximately $3 million, but is was very clear that they appeared to be using semantics in the description of the tax liability.
It comes down to this. They Morocco tax authorities have specifically defined 2.5 million as a shortfall, which has been through Due process and is therefore is tangible. The Morocco tax authorities have also said that $14 million is a potential liability, but this charge is still going through Due process and therefore is not currently a tangible liability. This is the wording that has been used and is probably why we have some confusion.
It is not a very exciting read but if you go through each one of the RNS you can se the detail.