Heritage tax ruling in detail

Uganda early this week won the first round of the $435m oil tax case, a decision that reaffirms its ability to control and manage the nascent oil and gas industry.

 The Tax Appeals Tribunal after a three hour session upheld that the transaction was taxable and the amount ($434.9m) assessed by URA remains the same.

The tax dispute started when Heritage Oil and Gas Ltd announced its intention to transfer its Ugandan petroleum assets to Italian giant ENI in December, 2010.

 But Tullow Oil Uganda, which had 50% stakes in the assets, exercised its first right of option under the same terms. But Uganda Revenue Authority (URA) demanded 30% of the $1.5m deal in capital tax gain tax before the transaction was approved.

Heritage was against paying the tax. They stated that “based on comprehensive advice from leading tax experts in Uganda, United Kingdom and North America” the transaction was not taxable in Uganda.

They have now responded to the Tax Appeals Tribunal decision granting the Uganda Revenue Authority (URA) rights to collect $434.9m (sh1.22 trillion) in capital gains tax saying the ruling was “fatally flawed in many respects” and “not final and determinative.”

HERE IS THE RULING IN DETAIL.

CLICK HERE FOR PART ONE OF THE RULING

CLICK HERE FOR PART TWO OF THE RULING