Tullow Oil, which specialises in oil exploration and production in West Africa, announced on Thursday that the International Chamber of Commerce (ICC) had ruled that the Branch Profits Transfer Tax (BPRT) did not apply to its operations in the Deepwater Tano and West Cape Three Points fields, located off the coast of Ghana.
The decision exempts Tullow from payment of a $320 million BPRT assessment and removes any future tax liability in respect of this tax. This represents significant financial relief for the company, which has seen its Ghanaian operations at the heart of its portfolio of projects in West Africa.
The BPRT, it should be remembered, is a tax levied on the profits that a foreign company makes in a country before transferring them to its parent company located abroad. The ICC decision clarifies the interpretation of this tax in the context of Tullow's operations in Ghana.
Despite this legal victory, Tullow Oil remains engaged in discussions with the government of Ghana to resolve two other outstanding tax disputes. The company did not disclose the details of these claims, but reiterated its commitment to working with the local authorities to reach a mutually satisfactory resolution.
The ICC's decision is a positive step for Tullow as it seeks to strengthen its position in the West African oil industry. With strategic operations in the region, including Ghana, Tullow aims to continue to optimise its financial performance while maintaining a constructive dialogue with local governments.
This case highlights the complex issues surrounding tax regulation in the hydrocarbon sector and the importance for foreign operators of having clear legal frameworks to support their activities over the long term.
