Finance Ministry: Tullow loses US$393m tax challenge as Ghana secures arbitration victory

Tullow Ghana Limited has lost its challenge against a US$393 million tax assessment issued by the Ghana Revenue Authority (GRA), after an international arbitration tribunal ruled in favour of Ghana.

The tribunal, constituted under the Rules of Arbitration of the International Chamber of Commerce, delivered its ruling on Tuesday, September 29, dismissing all claims brought by Tullow in connection with the taxation of business interruption insurance proceeds.

In a statement issued on Wednesday, September 30, the Ministry of Finance said the tribunal upheld the GRA’s assessment of US$393,091,993.70 in full.

The tribunal also found that the assessment was consistent with the applicable Petroleum Agreements, the penalty imposed by the GRA was valid, the assessment was not time-barred and the Authority’s enforcement action was lawful.

The Finance Ministry said the decision reinforces Ghana’s position that companies operating in the country must comply with its laws.

“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,” the government stated.

The Ministry commended the Office of the Attorney-General, the GRA and external legal counsel Folely Hoag LLP for their roles in defending Ghana’s position.

Despite the outcome, government said it remains committed to working with Tullow, describing the company as Ghana’s largest petroleum producer and an important partner in the country’s oil industry.

“Tullow remains a vital partner to Ghana and is the country’s largest petroleum producer. Its operations in the Jubilee and TEN fields support Ghana’s energy security, domestic gas supply and thousands of Ghanaian livelihoods. It is in the national interest that this relationship endures,” the statement said.

The government disclosed that it had engaged Tullow before the arbitration ruling in an effort to resolve outstanding tax matters amicably.

Those engagements, it said, will continue to cover the matters determined by the tribunal as well as separate proceedings involving the disallowance of loan interest.

Government said it will work with Tullow to implement the tribunal’s award in accordance with Ghanaian law, while considering the continuity of operations and the company’s capacity to maintain investment in the Jubilee and TEN fields.

“Ghana’s laws provide the Ghana Revenue Authority with the means to determine the time and manner in which assessed liabilities are met,” the Ministry said.

It added that the implementation of the award would seek to protect revenue due to the state without undermining Tullow’s continued operations in Ghana.

“The Government intends to ensure that the award is implemented in a way that secures the revenues due to the Ghanaian people while preserving Tullow’s ability to continue operating and investing in Ghana as a GOING CONCERN,” the statement said.

The dispute arose from the taxation of business interruption insurance proceeds received by Tullow. The company challenged the resulting GRA assessment through international arbitration.

The tribunal has now dismissed Tullow’s claims and upheld the full US$393.09 million assessment in favour of Ghana.