Chevron Corp has withdrawn an appeal to Australia's High Court over a disputed A$340 million ($268 million) tax bill, leaving in place a landmark court ruling on related-party loans that could affect other multinational companies.

"Chevron Australia has reached agreement with the Australian Taxation Office on the loan transfer pricing dispute and have withdrawn our appeal to the High Court," the company said in an emailed statement.
"Chevron believes the agreed terms are a reasonable resolution of the matter."

The oil and gas giant and the tax office declined to comment on the size of the settlement.

With the appeal withdrawn, a Federal Court ruling remains in place, which found Chevron had underpaid taxes by setting up a A$2.5 billion intercompany credit facility offshore with an abnormally high interest rate, effectively lowering its taxable income within Australia.

"The judgement in Chevron is one of the most important decisions in corporate tax in Australia," an Australian Taxation Office spokesman said in an emailed statement.

Chevron did not say why it decided to drop its appeal to the nation's highest court. It lost an earlier appeal in Australia's Federal Court in April. The case covered the tax years from 2004 through 2008.

The closely watched case is a first test of how Australia's transfer pricing rules apply to interest paid on a cross-border related-party loan.

"We have been very clear that this case would have direct implications for a number of cases the ATO is currently pursuing in relation to related party loans, as well as indirect implications for other transfer pricing cases," the ATO spokesman said.

"The ATO will not shy away from lengthy or complex cases. We have the laws, the powers and the capability to hold these multinational companies to account.