Writes Leo Odera Omolo
UGANDA Revenue Authority (URA) is demanding over $404m (about sh810b) from the planned sale of two oil fields, Blocks 1 and 3A, found in northern and western Uganda.
The money is in form of income tax and capital gains on disposal of the oil assets.
“The disposal of the licence interests in blocks 1 and 3A gives rise to income sourced in Uganda,” Moses Kajubi, the domestic taxes commissioner, stated in an April 9 letter, written to Heritage Oil and Gas Ltd.
It was also copied to the URA commissioner general, Allen Kagina, permanent secretaries of the energy and finance ministries and the Bank of Uganda governor.
Heritage is in the process of selling its interest in the oil fields, valued at $1.5b.
The deal entails that a prospective buyer immediately pays $1.35b and a further $150m or surrender a stake in a producing oil field of a similar value within two years.
However, the transaction has not been finalised as the Government is still studying documents submitted by two companies, Tullow Oil and Italy’s Eni, to buy the oil assets.
Sources said URA has computed the capital gains on the basis of reducing signature bonuses earlier paid for the exploration licences, which amount to $250,000 from the consideration of $1.35b.
The balance will then be subjected to 30% of the income corporate tax, which brings the expected revenue collection to $404,925,000.
“Make payment to URA collections in US dollars Account Number 2362032291 at Bank of Uganda on assignment approval date or within 45 days from the date of service of this notice,” Kajubi demanded.
The rush in raising the taxes, even before the oil deal has been approved, comes at a time when the tax body registered revenue shortfall last month.
The loss created fears that the target of collecting sh4.4 trillion by close of June may not be met.
Experts opined that demanding payment from the unfinished transaction could be a strategy by URA to include the expected revenues as accrual income in its annual statement, a move that would mitigate the shortages.
In a move to meet its target, the tax authority has abolished an internationally-recognised customs valuation method, where taxes are assessed based on transaction value.
This violates the World Trade Organisation/General Agreement on Trade and Tariffs as well as the East African Community Customs Management Act.
Ends