Tullow Oil plc has said in its half-year report for 2024 that the outcome of an ongoing arbitration in respect of the Ghana Branch Profits Remittance Tax is expected in the second half of 2024.
In 2021, Tullow Oil filed a request for arbitration in respect of an assessment for Branch Profits Remittance Tax of US$320 million.
The hearing was scheduled for October 2023.
In a 2023 statement, Tullow Oil said in a statement that the assessments relate to 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, it noted, had been filed in accordance with the dispute resolution process set out in the Petroleum Agreements which govern TGL’s activities in Ghana.
Tullow said at the time that it considered that the two disputed tax assessments, which total $387 million plus penalties, breach TGL’s rights under its Petroleum Agreements.
Tullow noted that its decision to file for arbitration on these matters does not result in any change to the overall exposure previously disclosed.
Tullow said it believes that resolution through international arbitration will bring certainty, which is in the best interest of all stakeholders.
Notwithstanding this formal step, Tullow said it intended to continue to engage with the Government of Ghana, including the GRA, with the aim of resolving these disputes on a mutually acceptable basis.
Background to the assessments
TGL received a revised corporate income tax assessment for $190.5 million from the GRA relating to the disallowance of loan interest for the fiscal years 2010 – 2020.
Tullow had previously disclosed assessments by the GRA relating to the same issue.
However, the revised assessment received in December 2022 superseded all previous claims.
TGL also received a new corporate income tax assessment and demand notice for $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 25 January 2023.
Source: ClassFMonline.com/Terkperkuor Puor
