Tuesday July 29 2014

Tullow appeals against Shs1 trillion award to URA



Tullow Oil Company has filed an appeal challenging the $407million (about Shs1.069 trillion) award to Uganda Revenue Authority (URA) by the Tax Appeals Tribunal.
The money in question is Capital Gains Tax that URA had levied on Tullow after the oil company sold its interests in Uganda’s oil sector, valued at $2.9billion to China National Offshore Oil Corporation (CNOOC) and Total in 2012.
Tullow through its lawyers of Kampala Associated Advocates claims that it is dissatisfied with the tax appeal tribunal judgment hence the appeal dated July 21, 2014 before the Commercial.
In the appeal, Tullow claims that the Tax Tribunal errered in law by awrding URA and therefore, seeking for the court’s orders to stay the execution of the decree pending the hearing and disposal of their appeal.
“That Tullow Oil Company considers that their appeal of the decree has a good chance of success since they know that the tax appeal tribunal’s judgment erred in their decree,” reads the notice of appeal in part.
They contend that they will suffer substantial loss if their application for temporary reliefs is not granted.
On July 16, this year the Tax Tribunal Chaired by Mr Asa Mugenyi ruled that Tullow Oil should pay URA capital gains tax of $407,095,366 as amount it owed the tax body.
The tribunal further ordered Tullow to pay two-thirds (2/3) of the costs of the application to URA.
After the ruling, URA’s legal supervisor released a statement, saying the total amount of capital gain tax before any re-investment relief was $542,793,821.2)
“The applicants (Tullow) are entitled to a re-investment relief of $135,698,455,” read the statemnet in part.
The said re-investment in an asset of a like kind should have been made in the period between February 21, 2012 and February 21, 2013. In the event that the applicant(Tullow) did not comply with this order, the said relief or that amount of relief which had not been proved would crystallize into capital gains tax on the expiration of the said period and will attract interest of 2 per cent per month till payment.”