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. Last Updated: 07/27/2016

TNK-BP Braced for Taxman

Oil major TNK-BP said Friday that it had made a $123 million provision in its 2004 accounts in case it must cover back tax claims from the authorities.

The company has said the total claim for 2001 is around $1 billion. That is the only year so far for which the government has made a claim.

On Friday, the company said in its annual report that it considered around $721 million in liabilities "probable," while the remaining $288 million "are possible but not probable" under U.S. GAAP accounting rules.

TNK-BP's chief executive Robert Dudley had said he expected the company and tax officials to find a mutually acceptable solution in the first half of 2005, bringing the tax claim significantly down from $1 billion.

On Friday, the company said the back tax claim remained unresolved as of the date of the report.

TNK-BP also said its net profit rose by 43 percent in 2004 to $4 billion and sales soared by 42 percent to $17 billion.

It said it would pay out 96 percent of its 2004 profits, or $3.854 billion, as dividends. It said it had declared dividends of $500 million in the first quarter this year and $850 million in the second quarter.

TNK-BP said it paid a total of $6.5 billion in taxes and duties in 2004, an average effective tax rate of 23.3 percent --close to Russia's average of 24 percent and much higher than previously.

It has said it expects to pay $11.5 billion in taxes and duties this year.