Ghana has secured a favourable ruling in its tax arbitration with Tullow Ghana Limited, with an international tribunal dismissing the company’s claims and upholding in full a US$393.09 million tax assessment issued by the Ghana Revenue Authority (GRA).

The dispute centred on the taxation of business interruption insurance proceeds received by Tullow, with the company challenging the assessment and related actions by the GRA.

However, the tribunal, constituted under the Rules of Arbitration of the International Chamber of Commerce (ICC), ruled in favour of Ghana on the key issues raised in the dispute.

It found that the tax assessment did not breach the Petroleum Agreements governing Tullow’s operations in Ghana.

The tribunal also determined that the penalty imposed by the GRA was properly applied, that the assessment was not time-barred and that the GRA’s enforcement action was lawful.

The ruling represents a significant affirmation of the authority of Ghana’s tax administration to enforce tax obligations against companies operating in the country, including major international businesses.

Govt welcomes ruling

The Minister of Finance, Dr Cassiel Ato Forson, said the decision affirmed Ghana’s position that every company operating in the country, regardless of its size, was subject to Ghanaian law.

In a statement, he commended the Office of the Attorney-General, the GRA and Ghana’s external legal counsel, Foley Hoag LLP, for their work in defending the interests of the Republic throughout the arbitration process.

Dr Forson said the Government would continue engaging Tullow to resolve outstanding tax matters amicably, stressing that the Government remained committed to maintaining a constructive relationship with the petroleum producer.

The ongoing discussions cover the matter determined by the tribunal as well as separate proceedings relating to the disallowance of loan interest.

Tullow remains strategic partner

Despite the favourable arbitration ruling, Dr Forson described Tullow as a vital partner to Ghana and the country’s largest petroleum producer.

He said the company’s operations in the Jubilee and TEN fields were important to Ghana’s energy security, domestic gas supply and the livelihoods of thousands of Ghanaians.

According to the Minister, it was in the national interest for the relationship between Ghana and Tullow to endure, indicating that the Government would seek to enforce the tribunal’s award while ensuring that the company remained capable of sustaining its operations and future investments in the country.

“The Government will therefore work closely with the company to implement the award in accordance with Ghanaian law, while safeguarding the continuity of operations and future investment in the Jubilee and TEN fields,” he said.

Balancing revenue and investment

Dr Forson said Ghana’s laws gave the GRA the authority to determine the time and manner in which assessed tax liabilities were settled.

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

The approach, he said, was intended to protect the interests of the state without undermining the continued operation of strategic petroleum assets.

The arbitration decision therefore settles the specific tax dispute before the tribunal, while discussions between the Government and Tullow continue on the outstanding matters.

The Government’s position is that the tribunal’s decision must be implemented in accordance with Ghanaian law, while the broader relationship with Tullow is maintained to support continued production from the Jubilee and TEN fields and future investment in Ghana’s petroleum sector.