Ghana wins tax dispute against Tullow, international tribunal upholds US$393m tax assessment

The Tribunal upheld a US$393.09 million tax assessment issued by the Ghana Revenue Authority (GRA).

A statement issued by Finance Minister, Dr. Ato Forson on September 30 said the tribunal found that the tax assessment did not breach Ghana’s Petroleum Agreements with Tullow, while also ruling that the penalty imposed by the GRA was properly applied and that the assessment was not time-barred.

Ato Forson emphasised that the Tribnal further found that the GRA’s enforcement action was lawful.

"The Tribunal ruled in favour of Ghana. It dismissed all claims brought by Tullow and upheld in full the Ghana Revenue Authority's tax assessment of US$393,091,993.70.

"The Tribunal found that the assessment did not breach the Petroleum Agreements, the penalty was properly applied, the assessment was not time-barred, and the Ghana Revenue Authority's enforcement action was lawful," the statement said.

The Minister acknowledged the work of the Office of the Attorney-General, the GRA and Ghana’s external legal counsel, Foley Hoag LLP, in defending Ghana's interests in the case.

The Government said the ruling reinforces its position that companies operating in Ghana, regardless of their size, are subject to the country’s 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,” Ato Forson noted.

The ruling comes as Ghana and its Jubilee partners seek to maximise production and investment in the Jubilee and TEN oil fields.

The government disclosed that it had been engaged in discussions with Tullow before the tribunal’s decision to find an amicable resolution to outstanding tax matters between the two parties.

Those discussions, it said, will continue to cover both the matter determined by the tribunal and a separate dispute concerning the disallowance of loan interest.

Despite the tax dispute, government stressed that Tullow remains a key partner in Ghana’s petroleum sector and the country’s largest petroleum producer.

It said Tullow’s operations in the Jubilee and TEN fields contribute to Ghana’s energy security, domestic gas supply and the livelihoods of thousands of Ghanaians.

The government therefore intends to work with Tullow to implement the tribunal’s award in accordance with Ghanaian law, while taking into account the need to maintain operations in the two fields.

Ghana’s laws, government noted, give the GRA authority to determine the time and manner in which assessed tax liabilities are paid.

It said its objective is to secure the revenues due to the Ghanaian people while preserving Tullow’s capacity to continue operating and investing in Ghana as a going concern.