Sinoma International announced a dispute between the Saudi branch of Sinoma International Engineering Co., Ltd. and the local tax Bureau of Saudi Arabia over the tax payment of the Saudi branch of Sinoma International from 2006 to 2008. The disputed amount is 33.04 million Saudi Arabian riyals (equivalent to about 61.04 million yuan at the mid-price of the exchange rate of RMB to Saudi Arabian riyals in the interbank foreign exchange market on October 18, 2018) and a late fee of 1% of the tax per 30 days.
Sinoma International recently received a notice from the Saudi branch of Sinoma International that the Saudi Arabia Higher Appeals Committee reached a decision to uphold the original decision of the Saudi Arabia Primary Appeals Committee. If the Saudi branch of Sinoma International does not initiate legal proceedings against the decision within 60 days after the decision is made, the decision will be final and binding. According to the opinion of the professional agency, there is a possibility that the court will give a favorable judgment or reach a settlement agreement after the legal proceedings are brought.
In view of the above, the Saudi branch of Sinoma International intends to initiate legal proceedings in Saudi Arabia against the decision. Due to the uncertainties regarding timing and amount, the Company is unable to estimate the financial impact of the tax dispute on the Company.
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