London Court to rule on GRA tax charge against Tullow OIl

A ruling on the Ghana Revenue Authority's (GRA) $400 million tax assessment against Tullow Oil is anticipated from the International Arbitration Court in London by the end of this year.

Tullow Oil shared this update in its Trading Report released on November 29, 2024, emphasizing that the court is preparing to issue its verdict after both parties presented their cases.

In its statement, Tullow noted, "A hearing regarding this dispute was held in October 2023, and a decision is expected before the end of the year."

Rahul Dhir, Group Chief Executive of Tullow Oil PLC, addressed the potential impact of the court's ruling earlier this year during a meeting with investors in London. He acknowledged that the outcome could significantly affect the company’s operations and financial position.

"Management has carefully evaluated the potential outcome based on legal and tax advice, as well as past experiences with similar claims," Dhir said.

Background of the Dispute

The dispute originated in October 2021 when Tullow Ghana Limited (TGL) challenged a $320.3 million Branch Profits Remittance Tax (BPRT) issued during a direct tax audit for the 2014 to 2016 fiscal years. Subsequently, in February 2023, TGL filed additional arbitration requests with the International Chamber of Commerce in London, disputing two separate tax assessments from the GRA.

These assessments concern the disallowance of loan interest deductions for fiscal years 2010 to 2020 and proceeds received under the Group's corporate Business Interruption Insurance policy between 2016 and 2019.

Tullow contends that the application of BPRT by the GRA relies on laws that do not align with the company's petroleum agreements or double tax treaties. The company has argued that the tax assessment falls outside the legal framework governing its operations in Ghana. Tullow is not obligated to pay the disputed amount until the case is resolved.