Ghana Wins US$393m Tullow Tax Arbitration

Ghana has won an international tax arbitration case brought by Tullow Ghana Limited over the taxation of business interruption insurance proceeds, with the arbitral tribunal dismissing all claims by the oil company.

The tribunal, constituted under the Rules of Arbitration of the International Chamber of Commerce, ruled in favour of Ghana and upheld in full the Ghana Revenue Authority’s tax assessment of US$393,091,993.70 against Tullow.

According to a statement signed by the Minister for Finance, Dr Cassiel Ato Forson, on Wednesday in Accra, the tribunal found that the assessment did not breach the applicable Petroleum Agreements.

It also ruled that the penalty imposed by the Ghana Revenue Authority was properly applied, the assessment was not time-barred, and the Authority’s enforcement action was lawful.

Dr Forson acknowledged the work of the Office of the Attorney General, the Ghana Revenue Authority and Ghana’s external legal counsel, Foley Hoag LLP, in defending the interests of the Republic.

He said the outcome supported Ghana’s position that every company operating in the country, regardless of its size, was subject to its laws.

The Minister, however, said the Government remains committed to working with Tullow, describing the company as a vital partner and Ghana’s largest petroleum producer.

He said Tullow’s operations in the Jubilee and TEN fields support Ghana’s energy security, domestic gas supply and thousands of livelihoods.

Dr Forson said the Government would work closely with Tullow to give effect to the award in accordance with Ghanaian law, while taking into account the continuity of operations in the Jubilee and TEN fields and Tullow’s capacity to sustain the investments required in those fields.

He added that the Government would continue discussions with Tullow to resolve outstanding tax matters between the parties, including separate proceedings concerning the disallowance of loan interest.

The Minister said the Government intends to ensure that revenues due to the Ghanaian people were secured while preserving Tullow’s ability to continue operating and investing in Ghana as a going concern.

Joyce Adwoa Animia Ocran, ISD