The Altium Limited (ASX: ALU) share price was out of form and started the week with a disappointing decline.
The electronic design software company's shares ended the day 3% lower at $36.30.
This compares to a 0.2% decline by the ASX 200 index.
Why did the Altium share price tumble?
Investors were selling down the Altium share price on Monday following the release of the company's update on its dealings with the Australian Tax Office (ATO).
According to the release, the company has received a formal communication from the ATO in relation to an alleged tax liability.
The release notes that the ATO intends to proceed with issuing amended assessments for the 2016 to 2018 tax years of approximately $80 million. This excludes any penalties and interest, but does not include deductions of global operating costs.
In addition, the ATO has indicated that it will also commence a roll over audit of the subsequent 2019 to 2021 tax years.
Altium's response
Altium revealed that it disagrees with the ATO on the matter. It believes that the the tax office's position is based on a misperception of the substance that underpinned Altium's relocation to China in 2011 and subsequent relocation of its core business assets in 2015 to the United States.
Furthermore, the company regards the amended assessments as "illogical." This is because it implies an Australian corporate tax rate of approximately 65% of profit before tax.
Altium advised that it continues to engage external legal advisers in relation to this matter and will request an independent internal review of the decision by the ATO. It also plans to vigorously defend its position and, if necessary, contest the matter through litigation proceedings.
