Tullow Ghana Limited (TGL) has dragged Ghana to the International Chamber of Commerce in London by filing the request for arbitration in respect of two disputed tax assessments received from the Ghana Revenue Authority (GRA).
The assessment has to do with the disallowance of loan interest deductions for the fiscal years 2010 – 2020 and proceeds received by Tullow Oil PLC under Tullow’s corporate business interruption insurance policy.
The requests for arbitration have been filed in accordance with the dispute resolution process set out in the petroleum agreements which govern TGL’s activities in Ghana. Tullow said it considers that the two disputed tax assessments, which total US$387 million plus penalties, breach TGL’s rights under its petroleum agreements.
According to Tullow, its decision to file for arbitration on these matters does not result in any change to the overall exposure previously disclosed. Meanwhile, Tullow believes that resolution through international arbitration will bring certainty, which is in the best interest of all stakeholders.
Notwithstanding this formal step, Tullow intends to continue to engage with the Government of Ghana, including the GRA, with the aim of resolving these disputes on a mutually acceptable basis.
The International Chamber of Commerce (ICC) is the largest world business organisation representing 6.5 million companies in 136 countries. ICC represents some of the largest and most successful international companies with large value chains operating in more than 170 overseas markets.
ICC has three main activities: rule setting, dispute resolution, and policy advocacy. Because its member companies and associations are themselves engaged in international business, ICC has unrivaled authority in making rules that govern the conduct of business across borders.
Although these rules are voluntary, they are observed in thousands of transactions every day and have become part of international trade. As such, it is expected that Tullow went to the ICC under dispute resolution activities.
Background To The Assessments
TGL received a revised corporate income tax assessment for US$190.5 million from the GRA relating to the disallowance of loan interest for the fiscal years 2010 – 2020.
Tullow previously disclosed assessments by the GRA relating to the same issue; the revised assessment received in December 2022 supersedes all previous claims.
TGL also received a new corporate income tax assessment and demand notice for US$196.5 million from the GRA relating to proceeds received by Tullow during the fiscal years 2016 – 2019 under Tullow’s corporate Business Interruption Insurance policy, previously referred to in Tullow’s Trading Update on 25th January 2023.
Tullow had previously filed a request for arbitration in respect of a separate assessment for Branch Profits Remittance Tax of US$320 million in 2021. A hearing in respect of this dispute is scheduled for October 2023.
Tullow is an independent oil & gas, exploration, and production group which is quoted on the London and Ghanaian stock exchanges (symbol: TLW) and is a constituent of the FTSE250 index. The Group has interests in over 30 licenses across eight countries. In March 2021, Tullow committed to becoming Net Zero on its Scope 1 and 2 emissions by 2030.
