Nippon Oil files suit over Japan tax office finding

TOKYO, July 23 (Reuters) - Japan's Nippon Oil Corp 5001.T said on Thursday it had filed a lawsuit with the Tokyo District Court, asking for a rejection of the National Tax Tribunal's findings in January that imposed extra taxes on the refiner on gains from energy derivatives trading.

Nippon Oil in December 2006 contested the Tokyo regional tax office's decision that the refiner pay an extra 12.5 billion yen ($139.5 million) in tax on swaps trading to hedge against moves in crude oil prices, but the National Tax Tribunal in January rejected that request.

The company said in 2006 it had hedged about 250,000 kilolitres (1.57 million barrels) of crude oil a year, or about 0.4 percent of its annual oil product sales.

The tax office said Nippon Oil did not use swaps to its purchases against volatile crude prices, but for earning 28.4 billion yen ($301.2 million) through derivatives trading. Those earnings were on top of booked earnings for the business year ended March 2005, the office told Nippon Oil.

Swaps are one of the widely used hedging tools in global oil markets. In Japan, banks and trading houses provide hedging services by using energy derivatives. ($1=94.30 Yen) (Reporting by Osamu Tsukimori; Editing by Ben Tan)