Hoegh LNG Partners is in tax trouble in Colombia.
Alongside its first-quarter earnings, the floating storage and regasification unit specialist said the local tax administration in Cartagena in April hit its Columbian subsidiary, Hoegh LNG Colombia, with a $1.8m bill for back taxes in 2016, 2017 and 2018.
The company was accused of failing to pay a municipal industry and commerce tax, similar to a sales tax.
“Management intends to deny the allegations and file an appeal to vigorously defend the Colombian subsidiary’s position,” Hoegh LNG Partners said.
According to the company, the dispute stems from the tax authority’s jurisdiction.
The municipal industry and commerce tax is levied on customer invoices for activities carried out inside Cartagena, but Hoegh LNG Partners said all its subsidiary’s activities take place offshore and outside the city’s borders.
“According to Colombian law, municipalities do not have jurisdiction over maritime waters or low-tide areas,” the company said.
It said it intends to deny the allegations and appeal “vigorously”, and that its outside legal advisors have said it would probably prevail.
Hoegh LNG Partners said it has not included any potential financial impacts from the dispute in its statements.
It said the range of possible losses for the period from 2016 to 2021, including accrued interest, could be between $1.3m and $2.9m.
Hoegh LNG Colombia owns the 170,000-cbm Hoegh Grace (built 2016).
The ship is on a 20-year charter to Sociedad Portuaria El Cayao, a joint venture of domestic energy firm Promigas and private equity investors. It is being used as an LNG import terminal.
The charter began in 2016.
