Schlumberger loses Alaska tax appeal

The Alaska Supreme Court has dealt oilfield services company Schlumberger a defeat in a tax dispute with the state.

The 17-page opinion released on July 18 says the dispute dates to September 2003, when the Alaska Department of Revenue issued Schlumberger a notice of assessment for additional corporate income taxes of $429,739 plus interest.

Schlumberger fought the assessment administratively and in state Superior Court, which ruled against the company.

The complex case centered on the connection between Schlumberger Ltd., the multinational parent company, and Schlumberger Technology Corp., the subsidiary conducting business in Alaska.

A Department of Revenue auditor concluded that Schlumberger Ltd. was a “single unitary business” with Schlumberger Technology, and thus part of the parent company’s dividend income from its foreign subsidiaries was subject to state taxation, the Supreme Court opinion says.

Schlumberger Technology argued that foreign dividends paid to Schlumberger Ltd. should not have been included in its taxable income under ANITA, the Alaska Net Income Tax Act.

Company lawyers contended an Internal Revenue Code provision was applicable and barred the state’s additional tax levy.

Schlumberger Technology also claimed violations of the interstate commerce and foreign commerce clauses of the U.S. Constitution.

Ultimately, however, the Alaska Supreme Court held in favor of the Department of Revenue and against Schlumberger Technology.

Justice Joel Bolger wrote the high court opinion.

- Wesley Loy