In a stock market statement, Sound revealed it had received written notification by the Moroccan General Tax Administration of a re-assessment of taxes for the company’s Sound Energy Morocco East Limited subsidiary.
It related to a tax audit by Moroccan authorities earlier this year, and, is related to the period between 2016 and 2018.
The Moroccan authorities assess some US$14mln of additional corporate and value-added tax liabilities relating to historical licensing changes.
“According to their assessment, the historical licensing changes detailed in the notification relate the Tendrara Lakbir Permit and the transfer of interest from Sound Energy Morocco SARL AU to Sound Energy Morocco East Limited,” Sound said in its statement.
“The company believes that the assessment arises from a misunderstanding of the historical licensing changes and together with its advisors will be engaging with the Moroccan Tax Administration to provide clarity and to seek to resolve the misunderstanding.”
Previously, at the end of June, Sound told investors that it had sufficient cash resources to last until March 2021 – at that time, it had raised £2.75mln to give it a cash balance of £4.2mln.
Sound today noted that it has 30 days to formally respond to the Moroccan tax notification.
Whilst it intends to engage constructively with the authorities the company said it will also formally refute the assessment.
In London, Sound Energy shares dropped 0.52p or 24.87% each to trade at 1.57p.