The government has amended the Income Tax law to impose taxes on oil deals and announced penalties for defrauding and defaulting companies to a tune of Shs1 billion.
In the new Income Tax (Amendment) Bill, 2010, the government has also provided for the transfer of interest in a petroleum agreement. In case of transfer of assets/interests, the government in the new Bill, insists that the “transferor contractor” will pay the taxes in full before the “transferee contractor” takeover.
The new legislation comes at a time when the government and Heritage are embroiled in a $404.9 million (Shs809.9 billion) tax dispute. The tax dispute follows a multi-billion deal involving the transfer of Heritage assets to Tullow oil.
According to the Finance Minister, Ms Syda Bbumba, “income earned by a contractor from activities other than petroleum operations shall (also) be taxed in accordance with the law.” In the Bill, the government has demanded that all oil taxes be paid in dollars.
The Bill signed by Ms Bbumba was tabled in Parliament yesterday by Junior Finance Minister Fred Omach. The deputy Speaker, Ms Rebecca Kadaga, later committed it to the parliamentary Finance Committee for further scrutiny.
To ensure compliance, the government has also empowered Uganda Revenue Authority commissioner general to audit oil companies for the purposes of recovering taxes due to the government.
“Nothing in a petroleum agreement or in any law shall be construed as limiting the right of the Commissioner General to undertake an audit for purposes of this Act,” the government proposals read in part.