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LONDON - Gulf Marine Services PLC (GMS), a provider of advanced self-propelled self-elevating support vessels serving the offshore oil, gas, and renewable energy sectors, has encountered a legal hurdle in its tax dispute with the Saudi Zakat, Tax and Customs Authority (ZATCA). The company’s latest settlement proposal was rejected, and a subsequent court judgment denied its appeal.
On Monday, GMS was informed that the Alternative Dispute Resolution Committee (ADRC) had not accepted its settlement offer regarding a tax assessment dispute for the years ending December 31, 2017, to December 31, 2019. The original assessment included a demand for $9.2 million, factoring in delay fines related to transfer pricing of an inter-group agreement.
In an unexpected turn, a court hearing scheduled for Thursday was advanced to the same day as the notification, resulting in a judgment against GMS. The company is yet to receive the written judgment and the final amount awarded, but it anticipates no further appeal options. GMS management intends to seek a waiver for the penalties imposed.
Despite this setback, GMS has assured stakeholders that it had made adequate provisions for this contingency in its 2024 financial statements in accordance with IFRIC 23. The actual financial impact will be disclosed once the final judgment amount is known.
The company maintains its adjusted EBITDA guidance for 2025 between $100 and $108 million and aims for a target EBITDA of $105 to $115 million for 2026. However, GMS acknowledges that the judgment may cause a slight delay in reaching its net leverage ratio goal of 1.5x, which currently stands at 1.79x. The final outcome of the tax dispute will depend on the overall performance of the Group’s business.
This news comes as part of a statement released by the company and reflects the ongoing challenges multinational companies can face with tax authorities in different jurisdictions.
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