The International Chamber of Commerce (ICC) has ruled in favour of Tullow Ghana in a high-stakes tax dispute with the Ghana Revenue Authority (GRA).

The issue was on the application of Branch Profit Remittance Tax (BPRT) on Tullow Ghana's operations.

The ICC Tribunal concluded that Branch Profit Remittance Tax does not apply to Tullow Ghana under the tax framework stipulated in its Deepwater Tano and West Cape Three Points Petroleum Agreements, which govern operations in the Jubilee and TEN oil fields.

This decision absolves Tullow Ghana of a $320 million tax liability previously assessed by the GRA and ensures the company faces no future exposure to BPRT under the agreements.

 The ruling underscores the binding nature of the Petroleum Agreements, which form the legal and operational foundation for Tullow’s activities offshore Ghana.

Tullow Chief Executive Officer, Rahul Dhir expressed satisfaction with the Tribunal’s decision, describing it as a reaffirmation of the company’s interpretation of the Petroleum Agreements. 

“We are delighted with the outcome and decision of the Tribunal, which affirms our assessment and removes a material overhang from our business,” Dhir said. 

He further emphasised Tullow’s commitment to engaging constructively with the Government of Ghana to resolve two additional tax disputes currently under ICC arbitration.

The unresolved claims, referred to the ICC in February 2023, remain a focus for Tullow as it seeks mutually acceptable resolutions with the Ghanaian authorities.

The company aims to maintain collaborative relations with the government to maximize value from its flagship Jubilee and TEN oil fields, key contributors to Ghana’s oil production.

Background on the dispute

The dispute centered on the interpretation and application of Ghana's tax laws in relation to the Petroleum Agreements signed between Tullow Ghana and the Government of Ghana. 

These agreements provide specific tax exemptions and stipulations designed to attract foreign investment and enhance the development of the country’s oil and gas sector.

The $320 million BPRT assessment issued by the GRA raised concerns about the stability and predictability of Ghana’s investment climate in the extractive industry. 

Tullow decided to challenge the assessment through international arbitration.

The ICC Tribunal’s decision not only provides clarity on the applicability of BPRT but also reinforces the significance of honouring the terms of Petroleum Agreements as a foundation for investor confidence in Ghana’s natural resources sector.

As Tullow and the Government of Ghana continue discussions on the remaining tax disputes, the outcome of these negotiations will likely shape the future of the country’s oil industry and its attractiveness to international investors.