PGS: Settles Brazilian Tax dispute
Petroleum Geo-Services ASA (“PGS” or “the Company”) announces that it has entered into an agreement with the tax authorities of Rio de Janeiro to settle all ongoing disputes related to Municipal Services Tax (“ISS”) on the licensing of MultiClient data.
The Municipality of Rio de Janeiro recently published new regulations for ISS relating to licensing of MultiClient data. PGS has opted to settle all the ongoing ISS disputes in accordance with the provisions of the new regulations and has together with the Municipality of Rio de Janeiro presented a motion to the courts for withdrawal of the lawsuits and release of the amounts deposited as escrow.
The settlement covers all historical periods and exposures relating to ISS on MultiClient licensing up to today. Under the settlement, PGS will pay an aggregate amount which is substantially less than the amounts already deposited by PGS for the parts of the exposure which are in court proceedings. With current exchange rates, PGS estimates that it will receive approximately USD 55 million of the amounts on deposit and therefore realize a significant positive liquidity effect. PGS expects that the funds will be released before year-end 2017.
PGS expects to record a loss of approximately USD 15 million in Q4 2017, since the full book value of the deposited amount is not recovered. The deposit was reported as restricted cash with a book value of USD 72.2 million at September 30, 2017.
PGS welcomes the new regulations issued by the Municipality of Rio de Janeiro which will increase transparency going forward and specifically require 2% ISS to be paid on MultiClient licensing.