Ghana Revenue Authority (GRA), has lost against Tullow Oil PLC in a dispute over Branch Profit Remittance Tax (BPRT).
The issue was that Tullow Oil must pay an amount of $320 million upon GRA’s evaluation of the tax framework stipulated under the BPRT.
However, the agreements between these two entities provided specific tax exemptions and stipulations designed to attract foreign investment and enhance the development of the country’s oil and gas sector.
Consequently, the $320 million BPRT assessment issued by the GRA raised concerns about the stability and predictability of Ghana’s investment climate in the extractive industry, and therefore causing Tullow Oil PLC to challenge the assessment through international arbitration.
The arbitrator, the International Chamber of Commerce (ICC), who ruled on the dispute, concluded that Branch Profit Remittance Tax does not apply to Tullow Ghana under the tax framework stipulated in its Deepwater Tano and West Cape Three Points Petroleum Agreements, which govern operations in the Jubilee and TEN oil fields.
The ruling underscores the binding nature of the Petroleum Agreements, which form the legal and operational foundation for Tullow’s activities offshore Ghana.
Tullow Chief Executive Officer (CEO), Rahul Dhir expressed satisfaction with ICC’s decision, describing it as a reaffirmation of the company’s interpretation of the Petroleum Agreements.
He said: “We are delighted with the outcome and decision of the Tribunal, which affirms our assessment and removes a material overhang from our business.”
The CEO further emphasized Tullow’s commitment to engaging constructively with the Government of Ghana to resolve two additional tax disputes currently under ICC arbitration.
The unresolved claims, referred to the ICC in February 2023, remain a focus for Tullow as it seeks mutually acceptable resolutions with the Ghanaian authorities.
As Tullow and the Government of Ghana continue discussions on the remaining tax disputes, the outcome of these negotiations will likely shape the future of the country’s oil industry and its attractiveness to international investors.
