Ghana Wins $393 Million Tax Dispute With Tullow At International Tribunal

Ghana has prevailed in a long-running tax dispute with Tullow Ghana Limited, a subsidiary of Africa-focused oil and gas producer Tullow Oil Plc, after an international arbitral tribunal upheld a tax assessment of $393.1 million against the company.

Ghana’s Finance Ministry announced the ruling in a statement on Wednesday signed by Finance Minister Cassiel Ato Forson.

The ministry said a tribunal constituted under the Rules of Arbitration of the International Chamber of Commerce (ICC) delivered its award on Tuesday in proceedings brought by Tullow Ghana against Ghana over the taxation of business interruption insurance proceeds.

The tribunal dismissed all claims brought by Tullow Ghana and upheld the Ghana Revenue Authority’s (GRA) tax assessment of $393,091,993.70, the ministry said.

It also found that the assessment did not breach the petroleum agreements governing Tullow’s operations in Ghana.

The tribunal further ruled that a penalty imposed by the GRA was properly applied, that the assessment was not time-barred and that the tax authority’s enforcement action was lawful, according to the ministry.

Forson acknowledged the work of the Office of the Attorney-General, the GRA and Ghana’s external legal counsel, Foley Hoag LLP, in defending the government’s position.

“This outcome vindicates the position Ghana has maintained throughout: that every company operating in this country, regardless of its size, is subject to the laws of Ghana,” Forson said.

The government said the ruling came as Ghana and its Jubilee partners were working to maximise the prospects of the Jubilee and TEN fields, two of the country’s major offshore oil developments.

The Finance Ministry said the government had been in discussions with Tullow before the award to seek an amicable resolution of outstanding tax matters between the two sides.

Those discussions will continue and will cover both the matter determined by the tribunal and separate proceedings concerning the disallowance of loan interest, the ministry said.

Despite the dispute, the government described Tullow as a key partner and Ghana’s largest petroleum producer, saying its operations at the Jubilee and TEN fields support domestic energy security, gas supply and thousands of jobs.

“It is in the national interest that this relationship endures,” Forson said.

The government said it would work with Tullow to implement the award in accordance with Ghanaian law while taking into account the continuity of operations at the Jubilee and TEN fields and the company’s ability to sustain investment in them.

Ghanaian law gives the GRA authority to determine the timing and manner in which assessed tax liabilities are paid, the ministry said.

The government said it intended to implement the award in a way that secures revenue owed to Ghana while preserving Tullow’s ability to continue operating and investing in the country.

In a separate statement responding to the tribunal’s decision, Tullow said it was disappointed with the outcome of the case.