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Almost US$70m lost in oil-deal taxes

  • SOURCE: | qwesa2big
  • oil moneyGhana may have lost close to US$7Omillion in taxes in two oil deals, being the transfer in 2011 of the EO Group’s 3.5 percent stake in the Jubilee Field to Tullow Oil, and Sabre Oil’s sale of its 4.05 percent share in the field to South Africa’s national oil company, PetroSA.

    That’s according to the Civil Society Platform on Oil and Gas, which blamed the situation on government’s failure to amend the Petroleum Income Tax Law (PITL,) to allow for, a 10% capital gains tax to be imposed on such transactions.

    “Unconfirmed reports say: the [Sabre-PetroSA] deal was worth something in excess of US$365million, meaning Ghana must have lost at ° least US$36.5million. Combined with the revenue lost in the EO Group¬ Tullow transaction, Ghana is losing approximately US$67million for lack of action on the PITL. Amendment bill,” a statement signed by Dr. Steve Manteaw, Chairman of the Platform, said.

    The P1atform thus called on government to as a matter ‘of urgency ensure amendment of the law to prevent any future losses.

    “We make ‘ these demands aware that, in so far as the PITL is -referred to in the petroleum agreements of the companies, the repeal of the Act may trigger agitation for renegotiation of aspects of the petroleum agreements of some companies but that is likely to be a small price we will pay compared to how much we have already lost in potential revenue, and how much we stand to lose in future transactions if the status quo is maintained,” the statement said.

    Although the General Income Tax Act (Act 592) generally imposes and mandates the payment of 10 percent capital gains tax on the trading of capital assets, the existing Petroleum Income Tax Law does not make it difficult for government to impose tax on the deals.

    Meanwhile, under the law, specific laws like the Petroleum Income Tax Law take precedence over general laws, like Act 592, which is’ currently deemed inconsistent with the Petroleum Income Tax Law.

    “We note that a Petroleum Income Tax Amendment Bill was awaiting clearance by the Attorney-General as at July 2011 to be taken through the process of passage but somehow work on the bill stalled.

    “In the circumstances we find ourselves, we demand as follows: that an urgent bi partisan parliamentary inquiry be instituted to look into the reasons for the failure to amend the PITL, bill and to recommend prosecution of any person found culpable for causing this massive financial loss to the state,” the  Platform said.

    Source: B&FT
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