Section 44—Transitional Provisions The Steering Committee appointed under the international Project Agreement shall until the WAGP Authority is fully established perform the functions of the WAGP Authority under this Act. SCHEDULES SCHEDULE 1 (section 1 (a)) FUNCTIONS OF THE WAGP AUTHORITY 1. Representation Functions The WAGP Authority is empowered to take the following actions and decisions in the name and on behalf of the States: (a) give consent to changes to the legal corporate structure of the Company as provided in clause 5.2 of the International Project Agreement or to a transfer by the Shareholders of shares in the Company as provided in clause 5.5 of the International Project Agreement; (b) monitor compliance by the Company with its obligations under the International Project Agreement; (c) give interim and final approvals to the Company of the design of the pipeline system and the plans for its fabrication or construction, in accordance with clause 16 and Schedule 17 of the International Project Agreement; (d) approve the Conceptual Design Package and the Front End Engineering Design Package in accordance with Schedule 17 of the International Project Agreement; 22 (e) negotiate and agree the terms of and approve the pipeline development plan with the Company, including amendments to the approved pipeline development plan; (f) negotiate and agree with the Company, amendments to the conditions on which pipeline licences are granted; (g) negotiate and agree with the Company the terms of the Access Code and any amendments to it, in accordance with Clause 26 of the International Project Agreement; (h) negotiate and agree with the Company waivers of the requirements of the Access Code or of clause 26 of the International Project Agreement, as contemplated in clause 26 of the International Project Agreement; (i) consult with the Company on the text of the WAGP Regulations and following notification by it of the proposed changes consult with the Company on the terms of any amendments to the Regulations, in accordance with clause 12.1 of the International Project Agreement; (j) negotiate and agree the appointment of a third party operator of the pipeline system in accordance with Clause 23.2 of the International Project Agreement; (k) consult with the Company on proposals for amendment to this Act, in accordance with clause 8.4 of the International Project Agreement; (l) negotiate and agree with the Company, any matters arising in connection with any expansion of the pipeline system as stated in clause 24 and Schedule 19 of the International Project Agreement; (m) give to the Company Notice of Failure to comply with the Access Code, in accordance with clause 26.7 of the International Project Agreement; (n) give to the Company notice to remedy a breach of the International Project Agreement, in accordance with clause 37.2 of the International Project Agreement; (o) give to the Company a Notice of Default, in accordance with Clause 37.4 of the International Project Agreement; (p) resolve the consequences of a default of the International Project Agreement by the Company, in accordance with Clause 37 of the International Project Agreement; (q) co-ordinate the administration of the Fiscal Laws in accordance with Schedule 8 of the International Project Agreement, including the giving of notices of assessment, negotiating and agreeing interest rate deductibility Mechanisms or approving the terms of loan agreements for interest rate deductibility purposes; (r) act on behalf of the States' respective tax authorities in respect of any proceedings brought by the Company against any or all of the State Parties before the WAGP Tribunal; (s) report to the Committee of Ministers on the implementation by the State Parties of their obligations under the Treaty and, in particular, where it appears that a State Party or State Authority is failing to comply with the provisions of this Treaty or this Act to the detriment of the Company, a project contractor, a buyer, a seller or a shipper; (t) carry out audits of the Company under clause 10 of the International Project Agreement; 23 (u) prepare and submit to the Company a budget for its operation as specified in clause 9.4(b) of the International Project Agreement, and notify the Company of its funding requirements as provided in clause 9.4(c) of the International Project Agreement and agree to certain changes of the funding of the WAGP Authority as referred to in clause 9.4(i) of the International Project Agreement; (v) give the Company prior written permission to enter into gas transportation agreements other than foundation gas transportation agreements, which are not in accordance with the Access Code; (w) provide the Company with any approvals or consents that may be required pursuant to the International Project Agreement; (x) negotiate and agree upon inclusion of items in the Exempt Goods List; (y) negotiate and agree maintenance standards with the Company in accordance with Schedule 9 to the International Project Agreement; (z) negotiate and agree changes to the approved tariff methodology with the Company in accordance with Schedule 7 of the International Project Agreement; (aa) establish and agree with the Company a certification system; (bb) give notice of intention of acceptance of transfer of the pipeline system following cessation of operation by the Company as specified in clause 41.4(a) of the International Project Agreement; (cc) make certain notifications as are specified in the International Project Agreement or in the WAGP Regulations; (dd) agree with the Company on a replacement index as referred to in clause 49 of the International Project Agreement; (ee) in the event of any challenge to the project authorisations or supplemental authorisations, intervene as provided in clause 32.2 of the International Project Agreement; 2. Facilitation functions The WAGP Authority has the following facilitating functions: (a) facilitate the grant, renewal or extension of project authorisations and supplemental authorisations in accordance with clauses 16 and 17 of the International Project Agreement; (b) receive, review and consult with the Technical Authorities and comment on the conceptual design package and the front end engineering design package in accordance with Schedule 17 of the International Project Agreement; (c) receive, review and respond to the draft and final pipeline development plan and proposed amendments to the approved pipeline development plan; (d) receive, review and respond to the draft and final environmental impact assessment and environmental management plan, and co-ordinate and facilitate all necessary environmental approvals; 24 (e) co-ordinate amendments to the environmental management plan in accordance with clause 19 of and Schedule 2 to the International Project Agreement; (f) provide administrative services for the Fiscal Review Board and the WAGP Tribunal in accordance with the Rules of Procedure; (g) receive reports from the Company as specified in the International Project Agreement or in the WAGP Regulations; (h) distribute the original and amended emergency response plan prepared by the Company in accordance with the International Project Agreement; and (i) notify relevant agencies of occurrence of an emergency condition. 3. Regulatory Functions The WAGP Authority has the following regulatory functions: (a) review and respond to the Company in relation to, application for approvals to operate and grant approvals to operate, in accordance with clause 16.5 of the International Project Agreement and the WAGP Regulations; (b) enforce the WAGP Regulations and exercise the powers and responsibilities conferred on it under the WAGP Regulations, including inter alia its powers to inspect the design, construction and operation of the pipeline system in accordance with clauses 16.5 and 22.8 of the International Project Agreement and the WAGP Regulations; (c) monitor compliance with and enforce the Access Code and exercise the powers and responsibilities conferred on it under the Access Code and any implementing regulations; if at any time the Access Code is to be implemented in accordance with clause 26.7 of the International Project Agreement, (d) intervene and use its best endeavours to procure the compliance by a State Party or a State Authority with the International Project Agreement or this Act where the State Party or State Authority has failed to comply to the detriment of a WAGP Company, a project contractor, a buyer, a seller or a shipper; (e) act as a mediator between the Company and an aggrieved person who wishes to become a shipper. SCHEDULE 2 (section 30) AGREED FISCAL REGIME PART I—INTRODUCTION 1. WAGP Companies (1) This Schedule sets out the principles and rules relating to the liability for, the calculation of, and method of assessment of, tax on the Company including in respect of each other WAGP Company that is a branch of the Company in accordance with paragraph 16 (3) of this Schedule in relation to WAGP income. 25 (2) For the purposes of this Schedule, all income accrued and expenses incurred by any WAGP Company in respect of WAGP activities, is income accrued and expenses incurred by the Company, and the Company shall be liable to income tax in respect of it accordingly. (3) A WAGP Company other than the Company shall not have any liability to income tax in respect of WAGP activities. (4) The Non-WAGP Regime shall not apply to any WAGP company in respect of WAGP activities or WAGP income except as set out in this Schedule. (5) All income tax liabilities of the Company, and payments made by the Company in respect of those liabilities, shall be to the Internal Revenue Service. (6) The WAGP Authority shall participate in the determination of the liability of the Company to pay income tax as set out below. (7) The income tax liability of the Company shall be calculated by reference to each Tax Year. 2. Other Persons (1) This Schedule also sets out the principles and rules relating to the liability for, and the calculation of, tax on buyers, sellers, shippers and project contractors, to the extent specified in this Schedule. (2) The Non-WAGP Regime applies to such persons in respect of those activities of theirs which are contemplated in this Schedule and shall be modified in accordance with this Schedule. (3) If any WAGP Company undertakes any action, transaction or agreement, whether or not as a part of an arrangement or series of arrangements where the principal purpose of the WAGP Company in undertaking that action, transaction or agreement or arrangement or series of arrangements (a) is to obtain for the Company a relief or increased relief from repayment or increased repayment of income tax on WAGP income imposed by this Schedule; or (b) is for the avoidance or reduction of a charge to income tax or an assessment to income tax, the amount of the relief, repayment or charge for the Company shall be the amount that would have been the case had the action, transaction or agreement or arrangement or series of arrangements not been undertaken. 3. Interpretation For the purposes of this Schedule: "Agreed Fiscal Regime" means the fiscal regime as set out in section 30 of this Act and this Schedule; "Applicable Person" means a WAGP company or any other person including project contractors, buyers, sellers and shippers to whom the Agreed Fiscal Regime applies; "Applicable Rate" means a rate of interest equal to fifteen percent per annum, compounding annually; 26 "Certification System" has the meaning given to it in the International Project Agreement; "Completion Date" has the meaning given to it in the International Project Agreement; "Construction Expenditure" has the meaning given to it in the International Project Agreement; "debt" means any actual obligation whether present or future, secured or unsecured for the payment or repayment of money excluding contingent liabilities, amounts owing to trade creditors, and other liabilities incurred in the ordinary course of business; "Dispute Resolution Procedure" has the meaning given to it in the International Project Agreement; "Eligible Development Costs" has the meaning given to it in Schedule 16 of the International Project Agreement; "equity" means total assets, including retained earnings and other surplus reserves less total liabilities including debt, with the resulting sum being equal to the values ascribed to common stock, preferred stock, capital surplus or paid in capital and retained earnings or earned surplus, as disclosed in the audited accounts; "Fiscal Review Board" means the Fiscal Review Board established in accordance with the WAGP Treaty; "Fiscal Start Date" has the meaning given to it in the International Project Agreement; "income tax" means amounts payable by a WAGP Company in accordance with Part II of this Schedule; "minor taxes" means taxes other than Income Tax, VAT and customs Duties; “Non-WAGP Regime” means the legislation, regulations, principles of interpretation and application and any other features of the system of taxation applicable either generally or specifically in Ghana, as amended, modified or enacted from time to time which is not legislation introducing, amending, modifying, re-enacting or consolidating the Agreed Fiscal Regime; "Reservation Charge" has the meaning given to it in the International Project Agreement; and "WAGP Authority Charge" has the meaning given to it in the International Project Agreement. PART 2—INCOME TAX 4. Liability to and rate of Income Tax (1) Subject to the principles and rules set out in this Schedule, and in particular to paragraph 13 of this Part, the Company shall pay to Ghana, in respect of each Tax Year, income tax at the rate of 35% of its taxable income attributable to Ghana in the Tax Year. (2) The taxable income of the Company attributable to Ghana shall be calculated as set out in this Part following the apportionment between the States of WAGP income, allowable expenses and capital allowances as set out in this Part of this Schedule. 27 (3) In calculating the amount due in respect of income tax from the Company to Ghana, credit shall be given for any state liability which the Company has elected under subparagraph (8) of this paragraph. (4) Under this Schedule "state liability" means any or all of the following: (a) an amount of money which has been determined under the Dispute Resolution Procedure to be owing by Ghana to the Company under clause 36.4 of the International Project Agreement; (b) an amount of money which has been determined in accordance with this Schedule to be owing by Ghana to the Company under the Fiscal Laws and in respect of which no further appeal is permitted under Part 7 of this Schedule (whether as a result of the expiry of any time limit or otherwise) or in respect of which Ghana has confirmed that no appeal will be made by it; (c) an amount of money which is deemed under sub-paragraphs (5) or (6) to be owing by Ghana to the Company under this Part; (d) an amount of money which has been determined under paragraph 7 of this Part to be owing by Ghana to the Company; (e) interest on any of the above amounts arising under paragraph 20(2) of this Part or clause 44.3 of the International Project Agreement. (5) Where the Company claims that an amount is owing by Ghana to the Company under the Fiscal Laws including interest arising under paragraph 20 (2) of this Part in respect of which a further appeal is permitted under Part 7 of this Schedule; and in respect of which Ghana has not confirmed that no appeal will be made by it, the Company may give to the WAGP Authority and to the Tax Authority written notice setting out particulars of the amount in question and the circumstances in which the liability arose. (6) If Ghana disputes that any part of the amount set out in the notice is owing to the Company, it may within 30 days of receipt of such notice make application to the WAGP Tribunal for a determination that the amount or a part of it is not owing by Ghana to the Company and if Ghana does not make such an application, or does not make it in respect of the whole of the amount claimed, then for the purpose of this Schedule the amount stated in the notice, or if Ghana disputes only part of the amount stated in the notice the balance of the amount claimed, shall be owing by Ghana to the Company and shall be a state liability in accordance with sub- paragraph (4)(a) above. (7) If Ghana makes an application in accordance with sub-paragraph (5) to the WAGP Tribunal for a determination that an amount is not owing by it to the Company and (a) the application is dismissed in whole by the WAGP Tribunal, the amount stated in the notice shall be owing and shall be a state liability; (b) the application is dismissed in part by the WAGP Tribunal, the amount stated in the notice which relates to that part of the application which was dismissed shall be owing and shall be a state liability; 28 (c) the WAGP Tribunal makes a determination that an amount is owing, then that amount shall be a state liability. (8) The Company may in a return, elect to treat any part of a state liability as a credit in the calculation of the amount of income tax due to Ghana in respect of the Tax Year to which the return relates. (9) A notice shall be given within 30 days before the submission of the return and where a notice is given in accordance with this subparagraph the liability of the Company to income tax for the Tax Year to which the return relates shall be reduced accordingly. 5. Taxable income (1) "Taxable income" for any period equals the amount of WAGP income attributable to Ghana for that period less the aggregate of: (a) allowable expenses attributable to Ghana for that period; (b) capital allowances attributable to Ghana in respect of that period; and (c) any allowable losses available in Ghana. 6. WAGP Income and Allowable Expenses For the purposes of this Schedule, "income" means any receipts or realised gains of a revenue nature, determined in accordance with the Accounting Principles and includes amounts recovered by way of insurance claims, judicial or arbitral awards, recovered legal costs, rental or refunds, proceeds from sale or exchange of plant or facilities or supplies, or sale or licence of intellectual property, where under the Accounting Principles such amounts would be treated as income; and "expenses" means any payment or outflow or depletion of assets or incurrence of liabilities, other than distributions to equity participants. 7. WAGP income (1) Subject to subparagraph (2), the amount of "WAGP income" for any Tax Year is the aggregate of (a) payments accrued by the Company during that Tax Year that are derived from natural gas transportation operations which are WAGP Activities; (b) income accrued during that Tax Year in respect of any debt claims in which the Company is the creditor; (c) any other income incidental to WAGP Activities accrued by the Company during that Tax Year; and (d) any Negative Pool Balance in respect of that Tax Year. (2) WAGP income shall not include (a) an amount accrued in respect of the disposal of any capital asset other than as provided under subparagraph (1)(d); 29 (b) any accrual in respect of the WAGP Authority Charge or any part of the WAGP Authority Charge; (c) any dividend or any accrual in respect of any dividend received from any WAGP Company; (d) an amount accrued or payable to a WAGP Company by a State under the International Project Agreement, except where and to the extent that the amount paid is compensation for or reimbursement of lost WAGP income; or (e) an interest or other income accruing prior to the Fiscal Start Date. 8. Allowable Expenses (1) "Allowable Expenses" for a period means all expenses, other than non-allowable expenses, which are incurred in that period including accruals on any debt claims where the Company is the debtor wholly, exclusively and necessarily for the purpose of deriving WAGP income. (2) For the avoidance of doubt, expenses shall not cease to be allowable expenses solely as a result of being incurred in respect of related party transactions. (3) For the purposes of this Schedule, an expense shall be treated as incurred at the time at which and to the extent that an accrual in respect of the expense is properly recordable in the accounts of the Company in accordance with the Accounting Principles (or, in the case of costs incurred by shareholders or their affiliates, in the account of that person in accordance with its Accounting Principles). 9. Scope of "non-allowable expenses" "Non-allowable expenses" means: (a) expenses that are interest, to the extent that (i) the average ratio of debt to equity for the consolidated group during the Tax Year exceeds 70:30 provided that in calculating the amount of allowable expenses, and non-allowable expenses, where this ratio is exceeded, the amount of the interest expense shall be pro-rated between the two in accordance with the amount of debt that falls within and exceeds this ratio, respectively; (ii) such interest expense is incurred in an amount exceeding a reasonable commercial return for a borrowing between unconnected parties on the same terms for the same amount and entered into at the same time and for the same period and in the same currency as the relevant borrowing by the Company; and for the purpose of determining whether any interest expense exceeds the reasonable commercial return, where the Company and the WAGP Authority agree on a mechanism for determining reasonable interest rates for the purposes of this paragraph, or if the WAGP Authority approves the terms of a finance facility, then any interest expense incurred under a facility which complies with that mechanism or under any facility the terms of which are so approved, shall not be a non-allowable expense; or (iii) the debt in respect of which the interest expense accrues, is incurred for the principal purpose of reducing the Company's tax liability. 30 (b) any expenses incurred in providing business entertainment or gifts, other than the cost of accommodation, food and drink attributable to any employee or director of any WAGP Company incurred in Ghana; (c) legal fees or other costs of proceedings incurred in relation to arbitration of any determination under the International Project Agreement; (d) any expenses incurred prior to the Fiscal Start Date: (e) any expenses already taken into account as a deduction in respect of any tax liability calculated by reference to net profits or gains of any shareholder or affiliate of a shareholder in Ghana; (f) any expenses in relation to any purchase of goods or services from any shareholder or an affiliate of a shareholder to the extent that the consideration given exceeds the consideration which would be payable in an arm's length transaction of substantially the same nature between unconnected parties; (g) the cost of any letter of guarantee from shareholders or affiliates to the State, which is given in relation to the International Project Agreement; (h) fines and penalties imposed under any law and the costs of indemnities to employees, contractors or agents of any WAGP Company in respect of the fines and penalties; (i) any general overhead or general head office costs incurred by shareholders or affiliates and re-charged to any WAGP Company which does not include any amounts charged in respect of specific services supplied and separately invoiced by the shareholders or affiliates, to the extent that these exceed 1.5% of the Company's aggregate allowable expenses, excluding the amounts to be re-charged, for the relevant Tax Year; (j) any depreciation for accounting purposes in the value of any assets; (k) any capital expenditure or any debit for accounting purposes arising by reference to any capital expenditure; (l) any payment by the Company to the WAGP Authority which is reimbursable through the WAGP Authority Charge; and (m) any payments of, or on account of, tax and any interest, supplement or penalty in respect of an underpayment of, or on account of, tax. 10. Reliefs "Claimed reliefs" are the allowable losses available in Ghana plus capital allowances claimed in the return in respect of Ghana for the relevant Tax Year. 11. Loss Reliefs (1) If in any Tax Year the amount of allowable expenses attributable to Ghana exceeds the amount of WAGP income attributable to Ghana, the excess shall be an "allowable loss" of the Company available in Ghana for that Tax Year. 31 (2) An amount of allowable loss shall be carried forward and may be claimed by the Company in any of the nine subsequent Tax Years in accordance with this paragraph and with paragraph 5 of this Schedule. (3) Where an amount of any allowable loss is claimed and utilised by the Company in Ghana in any subsequent Tax Year, (a) the amount of the taxable income of the Company in Ghana in respect of that Tax Year shall be reduced by the amount of allowable loss so claimed; and (b) the amount of that allowable loss that may be carried forward for use in Ghana in subsequent Tax Years shall be reduced by the amount so used. (4) The Company's claim of any amount of allowable loss shall be in chronological order beginning with those that arose in the earliest available Tax Year. 12. Capital Allowances (1) All eligible development costs, and to the extent not included in the eligible development costs, all allowable expenses together with all expenses excluded from the definition of allowable expenses solely by reason of paragraph 9(a) incurred by the Company prior to the Fiscal Start Date, less the sum of all WAGP income derived by the Company prior to the Fiscal Start Date, including the amount of any interest income accruing to the Company prior to the Fiscal Start Date, shall be the amount of the "capital account" as at the Fiscal Start Date. (2) At the end of each Tax Year ending after the Fiscal Start Date, the amount of the capital account of the Company shall be adjusted by adding the amount of capital expenditure incurred by the Company in that Tax Year, other than capital expenditure incurred prior to the Fiscal Start Date, and subtracting an amount equal to the aggregate of the Disposal Proceeds for that Tax Year except that the result shall not leave the capital account as a negative number. (3) To the extent that the aggregate of the disposal proceeds for any Tax Year exceeds the amount of the capital account after adding the amount of capital expenditure incurred by the Company in that year but prior to adjustment in accordance with subparagraph (2) in respect of the amount equal to the aggregate of the disposal proceeds for that Tax Year or in accordance with this subparagraph, the amount of the excess, the "Negative Pool Balance", shall be treated as WAGP income of the Company for the relevant Tax Year, and the amount of the capital account shall be reduced to zero. (4) The Company may elect to claim an amount of relief, referred to as capital allowances" equal to not more than 25% of the balance of its capital account at the end of the relevant Tax Year. (5) The amount of the capital allowances shall be taken into account in reducing the taxable income of the Company for the relevant Tax Year as described in paragraph 5, and shall be deducted from the capital account at the commencement of the next succeeding Tax Year. (6) Capital allowances shall not be claimed, and the balance of the capital account shall not be reduced until the Tax Year or part thereof which falls after the end of the income tax holiday period, and in subsequent Tax Years. (7) "Capital expenditure" is 32 (a) the expenses of acquiring or improving any asset which is a capital asset; and (b) the expenses of capital services but, in each case, shall not include any expenses that do not exceed US$10,000. (8) An asset is a "capital asset" if that asset is acquired not with a view to its sale for a profit, but is used for the enduring benefit of the business of the Project. (9) A service is a "capital service" if that service is not provided to the Company or acquired by the Company to be utilised by the Company directly for an onward supply of goods and services with a view to profit, but is supplied for the enduring benefit of the business of the Project. (10) The Company will keep a ledger in US dollars recording all capital expenditure incurred and the capital asset in respect of which that capital expenditure has been incurred. (11) Where any capital asset is disposed of by the Company other than a disposal which is disregarded in accordance with paragraph 16(3)(d) of this Schedule, "disposal proceeds" shall arise in the Tax Year in which the disposal takes place, and the amount of the "disposal proceeds" shall be the amount of the sale proceeds or the value of other consideration received for that capital asset. 13. Income Tax Holiday (1) The "income tax holiday period" shall be the period starting on the Fiscal Start Date, and lasting for 60 months. (2) Income tax is not payable by the Company in respect of WAGP income arising prior to the last day of the Income tax holiday period. (3) If a Tax Year begins before and ends after the last day of the income tax holiday period, the amount of WAGP income earned and allowable expenses incurred in that Tax Year in the part periods before the last day and after the last day of the income tax holiday period shall be calculated on a pro-rata basis by apportionment of the total WAGP income and allowable expenses of the Tax Year between the two periods according to the number of days falling before that last day and the number of days falling after. (4) The maximum capital allowances claimable in respect of the period after the last day of the tax holiday period shall be pro-rated downwards in the same manner. (5) For the avoidance of doubt, income tax payable in respect of taxable income arising during the Tax Year in question shall be calculated only by reference to WAGP income and allowable expenses apportioned to the period after the last day of the income tax holiday period. 14. Assessment and Administration (1) All WAGP income, allowable expenses and capital allowances for a Tax Year shall be apportioned between each State in proportion to that State's Apportionment Percentage for that Tax Year determined in accordance with this paragraph irrespective of where or how such WAGP income might have been earned or accrued or expenses incurred. 33 (2) In each Tax Year the "Apportionment Percentage" of Ghana shall be derived according to the following formula: Aps = 45 x ((LS÷LT) + (RCS÷RCT)) + 2.5 where APs = the Apportionment Percentage of Ghana in the Tax Year, expressed as a percentage; Ls the length of pipeline comprised in the pipeline system situated within Ghana as at January 1 in that Tax Year, which has been commissioned, for which purpose the length of the pipeline within Ghana shall be determined by the as built survey carried out by the Company, and the length of lateral pipelines shall be included; LT = the total length of pipeline comprised in the pipeline system as at January 1 in that Tax Year, which has been commissioned, for which purpose the length of the pipeline shall be determined by the as built survey carried out by the Company, and the length of lateral pipelines shall be included; RCS = the sum of the quantities of reserved capacity which are reserved at any time for transportation of natural gas as at January 1 in that Tax Year, for delivery out of the pipeline system in Ghana; and RCT = the total sum of the quantities of reserved capacity which are reserved at any time for transportation of natural gas as at January 1 in that Tax Year. (3) On or before January 10 in each Tax Year, the Company shall notify the WAGP Authority and the Tax Authority of its calculation of the Apportionment Percentage of each State for that Tax Year. (4) The WAGP Authority shall on or before January 31 in that Tax Year notify the Company, on behalf of all of the Tax Authorities, whether it accepts the correctness of that calculation. (5) If the WAGP Authority notifies the Company that all of the Tax Authorities accept the correctness of the calculation, or if the WAGP Authority fails to notify the Company by January 31, then the Apportionment Percentages for that Tax Year shall be as calculated by the Company. (6) If the WAGP Authority notifies the Company that one or more Tax Authorities do not accept the correctness of the calculation, the Dispute Resolution Procedure shall be used to determine the Apportionment Percentage to apply for that Tax Year. (7) Pending the final determination under the Dispute Resolution Procedure, the Apportionment Percentages which applied during the previous Tax Year shall continue to apply. 34 (8) Upon the final determination of the Apportionment Percentages under the Dispute Resolution Procedure, there shall be an adjustment between the States and if applicable, between the States and the Company of any monies paid by or to the Company, without penalties or interest (including any supplement or interest as set out in paragraphs 20(1) or 20(2) of this Schedule, or any penalties set out under Part 6 of this Schedule. (9) The Apportionment Percentages to apply in any Tax Year, or the method of determining the Apportionment Percentages, may be adjusted by the States by written notice signed by each Relevant Minister and delivered to the Company prior to Tax Year; provided that: (a) the total of the Apportionment Percentages to apply in a Tax Year shall always equal one hundred percent (100%); (b) if a methodology is to be used to determine the division of the Apportionment Percentages between the States, the Apportionment Percentages shall be readily ascertainable on or before January 1 in the Tax Year concerned; and (c) if on January 1 in a Tax Year adjusted Apportionment Percentages which the States intend to apply in that Tax Year are not readily ascertainable in accordance with subparagraph (b) above, then the Apportionment Percentages which applied in the previous Tax Year shall continue to apply. 15. Tax returns (1) Commencing with the Tax Year in which the Fiscal Start Date occurs, the Company shall submit returns for each Tax Year as set out in the subsequent subparagraphs. (2) The returns shall comprise the audited company accounts of the Company, prepared in accordance with the Accounting Principles together with tax accounts showing the appropriate tax adjustments to the financial statements. (3) The returns shall include the results of the Company irrespective of the State to which they relate and the results of each other WAGP Company that is deemed to be a branch of the Company pursuant to paragraph 16 (3) and shall be prepared in accordance with the bases and assumptions in paragraph 16 (3). (4) The returns shall set out the WAGP income, allowable expenses and capital allowances for that Tax Year and the apportionment in accordance with paragraph 14(2) above of those amounts to each State, and shall include a calculation of the Company's liability to income tax in each State for that Tax Year and the basis of that calculation. (5) The Company shall maintain its accounting records and present its financial statements, income tax computations and returns in US dollars. (6) The Company shall keep its original financial statements, income tax computations, returns and all reasonably necessary supporting documentation in premises situated within one of the States at the choice of the Company. (7) The Company shall submit one return to the WAGP Authority and one to Internal Revenue Service within six months of the end of the Tax Year and the final date of the six month period shall be the "Filing Date". 35 (8) The Internal Revenue Service together with the relevant Tax Authorities of the other States shall jointly review the returns in conjunction with the WAGP Authority and prepare a single combined assessment referred to as the "Combined Assessment" on the basis of the information contained in the returns. (9) The Combined Assessment shall show the calculation of the taxable income of the Company in each State for the Tax Year in question, and the liability of the Company to each State for income tax in respect of the Tax Year in question, having credited any amounts to be credited in accordance with paragraph (2) above, and shall constitute a tax assessment referred to as the "Assessment" by each individual State for the amounts so assessed in respect of that State. (10) The WAGP Authority shall, on behalf of the Tax Authority in each State, issue the Combined Assessment to the Company within 90 days of the Filing Date; except that if the Company has not provided with the returns reasonably adequate information to justify the claims and calculations in the returns, the WAGP Authority may, within 30 days of the Filing Date, request such further information as it may reasonably consider necessary to justify the claims and calculations in the Returns, in which case the issue of the Combined Assessment shall be no later than the later of (a) 90 days following the Filing Date, and (b) 30 days after the Company provides such further information, the such later date being the "Assessment Due Date". (11) If the Company fails to submit returns in accordance with subparagraphs (1) to (7) above on or before the date falling 12 months after the Filing Date, the Internal Revenue Service together with the Tax Authorities in the other States may jointly (but not otherwise than jointly) in conjunction with the WAGP Authority prepare a Combined Assessment on the basis of the information of which they are aware. (12) The Combined Assessment prepared in accordance with subparagraph (11) shall constitute a tax assessment by each individual State for the amounts so assessed in respect of that State. (13) If, after the notification of a Combined Assessment the Company submits returns in accordance with requirements of subparagraphs (1) to (7) above, the returns shall be assessed in accordance with this Schedule and following such assessment subparagraph (12) shall cease to have effect and this Schedule shall apply as if no Combined Assessment had been issued under subparagraph (11). (14) If no assessment is issued in accordance with subparagraph (10) on or before the Assessment Due Date, then the Company shall be deemed to have been assessed by the Internal Revenue Service, exactly in accordance with the return filed by the Company, and such deemed assessment shall constitute the Assessment by Ghana accordingly. (15) An Assessment of liability to income tax of the Company shall only be made in accordance with subparagraphs (9), (10), (11) and (14), and shall not be made by the Internal Revenue Service otherwise than in accordance with those paragraphs. (16) An Assessment made under subparagraphs (10), (11) or (14) shall be without prejudice to the power for an amended or altered Assessment to be made following an audit, in accordance with paragraphs 17(4), (5) and (6). 16. Consolidated Tax Returns 36 (1) The Company shall promptly notify the WAGP Authority and the Internal Revenue Service in writing, when any wholly owned subsidiary of the Company engages in WAGP activities. (2) The Company and any subsidiary in respect of which the Company gives a notice under subparagraph (1) together referred to as the "consolidated group" shall be treated as a consolidated entity for the purposes of calculating the liabilities to income tax of the members of the consolidated group under this Schedule. (3) For the purposes of Part 2 of this Schedule, each of the members of the consolidated group other than the Company shall, with respect to the Tax Year in which notice is given under subparagraph (1) above and each subsequent Tax Year, be deemed to be a branch of the Company in respect of WAGP income, allowable expenses and claimed reliefs, and (a) income accruing to any other WAGP Company shall be treated as if it is or was accrued by or to the Company; (b) allowable expenses incurred by any other WAGP Company shall be treated is if they are or were incurred by the Company; (c) the belief, intent or purpose of the company shall be the same as that of the WAGP Company concerned, had no consolidation taken place; (d) any payments to and receipts from another member of the consolidated group including dividends, any indebtedness between members of the consolidated group and all supplies and disposals between members of the consolidated group shall be disregarded; (e) any asset that is or was acquired, held or improved by any WAGP Company shall be treated as if it is or was acquired, held or improved by the Company; (f) any indebtedness of or to any WAGP Company (other than any indebtedness disregarded pursuant to sub-paragraph (d) shall be treated as if it is or was indebtedness of or to the Company, (g) any goods or services (other than any goods or services disregarded pursuant to sub- paragraph (d) above provided to or acquired by any WAGP Company shall be deemed to be provided to or acquired by the Company, and any goods or services other than goods or services disregarded pursuant to sub-paragraph (d) provided by any WAGP Company shall be deemed to be provided by the Company; (h) any action, transaction or omission of any WAGP Company shall be treated as an action, transaction or omission of the Company; (i) any allowable loss that would have arisen to any member of the Consolidated Group other than the Company but for the bases and assumptions set out in sub-paragraphs (a) to (h) shall be treated as an allowable loss of the Company; and (j) each WAGP Company other than the Company shall have no liability to income tax in respect of WAGP activities or WAGP income. (4) The Company shall submit returns; and Assessments shall be issued to the Company, in accordance with the bases and assumptions set out above. 17. Audit and Amended Assessments/Returns 37 (1) The WAGP Authority may, on behalf of and as agent of the Internal Revenue Service request further information and conduct an audit of any return at any time during the period of six years from the Filing Date for that Return. (2) Except as provided in subparagraph (1), no audit of the Company shall be conducted by the Internal Revenue Service. (3) The WAGP Authority shall be empowered to act on behalf of and as agent of the Internal Revenue Service in dealing with the Company on a dispute as to an Assessment or the outcome of an audit and any agreement reached between the WAGP Authority so acting and the Company shall be binding on the Internal Revenue Service. (4) The Company may at any time during the six years following the filing date submit amended Returns for a Tax Year, one each to the WAGP Authority and the Internal Revenue Service. The Internal Revenue Service shall issue an amended Assessment or more than one amended Assessment in accordance with paragraph 15(8), (9) and (10) within 90 days of receipt of the amended return or, if it fails to do so, paragraph 15(14) shall apply. (5) The WAGP Authority, acting for and on behalf of the Internal Revenue Service may issue an altered Assessment to the Company if it considers that a previous Assessment was incorrect in any manner. (6) If there is a dispute as to an Assessment, then any agreement reached to resolve that dispute shall, in the absence of fraud, be binding on the WAGP Authority, the Company and the Internal Revenue Service and no Assessment shall be issued which is inconsistent with that agreement. 18. Currency of Income tax Payments All payments in respect of income tax shall be made in US dollars. 19. Interim Payments (1) Within 30 days of the commencement of each Tax Year, the Company shall deliver to the WAGP Authority an estimate of its income tax liability in respect of taxable income including, where applicable, as a result of paragraph 16(3) above for that Tax Year and the Company may vary the estimate at any time during the year by written notice to the WAGP Authority. (2) The Company shall make instalment payments on or before each of March 31, June 30 and September 30 in each Tax Year and the payment shall be of such an amount that the Company following that payment shall be deemed to have paid an amount of income tax in respect of taxable income in Ghana equal to the estimated income tax in respect of taxable income in Ghana for the Tax Year multiplied by the product of 25% and the number of instalment payment dates that have then fallen due and the final instalment payment shall be made on or before December 31. (3) The Company shall, at the same time as filing its returns for each Tax Year, pay a further instalment payment equal to the amount of further income tax, if any, which the returns indicate is owing by the Company. (4) An adjusting payment, if any, referred to as the "Adjusting Payment” shall be due within 30 days from the date on which the Assessment is issued, from the Company to Ghana if the 38 result of the Assessment is that further income tax is owed by the Company to Ghana, or from Ghana to the Company if the result of the Assessment is that the Company has overpaid instalment payments for the Tax Year in question. (5) Any supplement due from the Company under paragraph 20 shall also be due on that date and in the event that the Adjusting Payment is due from Ghana to the Company and any supplement is due from the Company to Ghana, the amounts shall be netted off and only the remainder shall be due. (6) If an income tax liability of the Company is adjusted following the issuance of an amended Assessment or an altered Assessment or following an appeal by the Company or a State, a further adjusting payment, if any, referred to as the "Further Adjusting Payment" will be due from or as the case may be, to the Company within 30 days from the date of which the amended or altered Assessment is issued or, as the case may be, the date on which judgement is given by the relevant appellate body, together with interest at the Applicable Rate from the date on which the amended or altered Assessment or decision on appeal is made. 20. Supplement and interest (1) Where, for any Tax Year, the amount of income tax due from the Company in Ghana on the basis of the return for the Tax Year in question exceeds the product of (a) 1.05; and (b) the aggregate of the instalments paid by the Company in Ghana for the Tax Year in question pursuant to paragraph 19(2). the Company shall pay, in accordance with paragraph 19(5) above, to Ghana a supplement of an amount equal to 10% of that excess. (2) Interest shall be payable in US dollars, and payable at the Applicable Rate on all other amounts owed by the Company to Ghana or by Ghana to the Company under the fiscal laws, and interest shall not be due in respect of over or under payment of instalments under paragraphs 19(2) and (3). 21. Withholding taxes (1) Amounts in respect of taxes shall not be with held or deducted from (a) dividends declared by the Company or any dividends declared by any WAGP Company which are disregarded pursuant to paragraph 16(1) and (2); (b) subject to subparagraph (2), payments by or to the Company in respect of interest, principal or fees, charges or costs in respect of debt or any such payment by or to any WAGP Company that is disregarded pursuant to paragraph 16(1) and (2); (c) payments in respect of branch profits or repatriation of branch capital of the Company or any such payment by or to any WAGP Company that is disregarded pursuant to paragraph 16(1) and (2); (d) payments made for sales of natural gas which has been or is to be transported through or consumed in the pipeline system; or 39 (e) payments to a Shipper or the Company for transportation of natural gas through the pipeline system or any such payment by or to any WAGP Company that is disregarded pursuant to paragraph 16(1) and (2). (2) If the Company makes any payment of interest to a person who is not resident in any of the States in respect of debt owed by the Company which was incurred other than in connection with the funding of Construction Expenditure or working capital or other costs incurred by the Company prior to the Completion Date, or refinancing of debt, originally incurred in connection with the funding of Construction Expenditure or working capital or other costs incurred by the Company prior to the Completion Date, (a) the payment of interest shall be made subject to a withholding in respect of taxes of the lender, of 10% of the gross payment; (b) the amount of the withholding shall be paid by the Company to the Internal Revenue Service in proportion to the Apportionment Percentages of Ghana applying in the Tax Year in which the withholding is made; and (c) the amount paid to the Internal Revenue Service shall be a final tax on income in Ghana in respect of that interest. (3) Where the Company receives services from a contractor within any of the States, the Company shall require a separate invoice in respect of the services that are rendered in Ghana, or a breakdown showing the amounts invoiced in respect of services rendered in Ghana. (4) The Company shall upon paying for services under subparagraph (3), apply a 6% withholding in respect of the invoiced amount and shall pay to the contractor the net amount and to the Internal Revenue Service the amount withheld in respect of services rendered in Ghana. (5) A withholding shall not be applied to services that are not rendered in Ghana or in any of the other States, and there shall not be a withholding in respect of goods supplied to the Company, whether supplied in conjunction with services or otherwise. (6) For the Purposes of subparagraphs (3), (4) and (5) a service shal
