Japan tax tribunal dismisses Nippon Oil tax appeal

TOKYO, Jan 30 (Reuters) - Japan's Nippon Oil Corp (5001.T) said on Friday the National Tax Tribunal rejected its request to nullify extra taxes imposed on the refiner in 2006 on gains from energy derivatives trading. Nippon Oil 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. Nippon Oil said in a statement on Friday it would examine the tribunal's decision and decide on the next course of action.

The company said in 2006 it 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 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=89.59 Yen) (Reporting by Osamu Tsukimori; Editing by Michael Watson)