Ghana earns $107.9million from oil in last quarter of 2012

All petroleum receipts had been allocated as required and would be reported and published in accordance with the law, the data, which was signed by the Minister of Finance, Mr Seth Tekper, noted.

 It, however, showed that partners of the Jubilee Field, led by Tullow Ghana, were yet to pay corporate tax to the government following their inability to make and report profit within the period under review.

This means that the country is yet to earn a pesewa as corporate tax from oil exploration and production (E&P) companies, two years into oil production at Cape Three Points off the Western coast of the country.

Corporate tax is 25 per cent of a company's profit and will be nil, as is the case with the E&P companies, should the company concerned report no profit.

Also, the fiscal regime entered into by the government and the companies allow for cost recovery of 20 per cent per annum over a five-year period.

As a result, any profit made by the companies will be returned to them and declared as cost (expenses incurred by the companies from 2007, when field and well development and appraisals started, to 2010, when actual production took off).

About US$4.2 billion was expended by the five companies, collectively called the Jubilee partners, within that period, according to data from them.

Per the contract entered into with those companies, that amount must be recovered as capital allowance or cost before they can begin to declare profit and subsequently be in a tax-paying position.

That notwithstanding, the government budgeted for GH¢660 million as corporate tax from the petroleum sector in the 2012 budget, a target it will not realise.

 A member of the Public Interest and Accountability Committee (PIAC), Mr Ishmael Edjekumhene, told the Daily Graphic in an interview that the committee was not surprised that the companies were still not able to pay tax.

“Tax is paid on profit; not revenue. So how do you expect to get tax when you have an agreement that allows the companies to recoup their initial costs in five years?” he asked.

“We (the PIAC) have said over and over again that the inclusion of corporate tax in the budget is not realistic but the won’t listen,” he added.

While admitting the inconvenience of the companies’ inability to pay tax on government revenue, Mr Edjekumhene said, “Realistically, we should expect corporate tax from the companies after three years of production.”

“They will soon be in a tax-paying position, hopefully by next year,” he said.

The 20 per cent cost recovery allowed in five years means that an average of US$800 million will be recovered in a year to make up for the stated US$4.2 billion cost incurred prior to production.

Story by Maxwell Adombila Akalaare