Ghana loses $320 million arbitration dispute over tax evaluation with Tullow Oil
In a big growth, the International Chamber of Commerce (ICC) has dominated in favour of Tullow Oil concerning a $320 million tax dispute with the Ghana Revenue Authority (GRA) in response to a launch by the West Africa-focused firm.
The ICC decided that the Branch Profit Remittance Tax (BPRT) doesn’t apply to Tullow’s operations in Ghana’s Deepwater Tano and West Cape Three Points fields.
Consequently, Tullow is exempt from the $320 million BPRT evaluation and won’t face future BPRT liabilities associated to those operations.
The arbitration ruling on the BPRT is a setback for Ghana and the GRA, as the choice successfully denies the nation $320 million in anticipated income. It additionally raises broader questions concerning the fiscal frameworks governing Ghana’s oil and gasoline sector, significantly as the federal government seeks to draw funding whereas guaranteeing truthful tax compliance.
Tullow Oil’s response to the ruling
In the press assertion on the ruling, Tullow Oil expressed aid on the end result, which it believes upholds its place on the tax assessments.
“Tullow is pleased that the ICC tribunal has confirmed our position that the $320 million BPRT assessment issued by the GRA in Ghana was not applicable to our operations,” the corporate acknowledged. “This ruling brings readability on the applicability of BPRT to our operations underneath the related Petroleum Agreements and double tax treaties.“
The firm emphasised its continued dedication to working with the Government of Ghana to resolve excellent disputes amicably.
Background of the dispute between Tullow Oil and BPRT
Tullow Oil is a key participant in Ghana’s oil and gasoline sector, with vital investments within the Jubilee and TEN fields. The BPRT is a tax on income that international companies earn inside a rustic and switch to their mum or dad firms overseas.
Tullow contested the GRA’s utility of this tax, arguing it was inconsistent with the phrases of their Petroleum Agreements and current tax treaties.
While the ICC ruling is a victory for Tullow, the corporate remains to be engaged in arbitration over two further tax disputes with the GRA. These embody the disallowance of mortgage curiosity deductions for the fiscal years 2010–2020 and proceeds obtained underneath Tullow’s Business Interruption Insurance coverage for 2016–2019. The mixed disputed quantity exceeds $387 million, plus penalties.
Tullow has acknowledged its intention to resolve these issues by constructive dialogue, with arbitration proceedings ongoing.
