Tullow Oil Plc has secured a significant victory in a $320 million tax arbitration dispute with the Ghana Revenue Authority (GRA), following a ruling by the International Chamber of Commerce (ICC) tribunal.
The decision, disclosed on Thursday, exempts Tullow from the Branch Profit Remittance Tax (BPRT) assessed by Ghana’s tax authorities.
According to a statement from Tullow Oil and reports from 3News and Financial Post, the ICC tribunal ruled that the BPRT, a tax on profits transferred by foreign businesses to their parent companies, “falls outside of the tax regime provided for in the petroleum agreements” governing its operations in Ghana.
The tribunal’s decision specifically applies to the company’s operations in the Deepwater Tano and West Cape Three Points oil fields.
“This ruling brings clarity on the applicability of BPRT to our operations under the relevant Petroleum Agreements and double tax treaties,” Tullow said, adding that it is committed to maintaining constructive dialogue with the Ghanaian government.
The BPRT dispute dates back to 2021 when Tullow challenged the GRA’s $320 million tax assessment. The company argued that the assessment was inconsistent with its Petroleum Agreements and existing double tax treaties.
Ghana’s tax authorities have, in recent years, issued similar back-tax demands to other multinational corporations, including MTN Group Ltd. and Kosmos Energy Ltd., as the government sought additional revenue amidst rising debt levels and fiscal pressures.
Implications for Ghana
The ICC ruling represents a setback for Ghana, which had anticipated additional revenue from the assessment. Analysts note that the decision raises questions about the country’s fiscal framework for oil and gas operations. Ashley Kelty, an analyst at Panmure Gordon & Co., told Financial Post, “The removal of a further liability will take some pressure off [Tullow’s] stretched balance sheet.”
Despite this victory, Tullow still faces two unresolved tax disputes with the GRA. These cases, which involve $387 million in disputed amounts related to loan interest deductions (2010–2020) and business interruption insurance proceeds (2016–2019), are currently under arbitration.
