Uganda’s National Assembly is set to probe the country’s tax body, Uganda Revenue Authority (URA) over reports that the latter waived tax to a tune of $157m (Approximately Shs564bn) to oil companies, Tullow Uganda Limited and Tullow Uganda Operations Pty Limited.
We have learnt that the two firms entered into an agreement with CNOOC and Total and URA made a tax assessment that was meant to be made on the sale.
The two Tullow firms were supposed to pay USD2.9bn and USD 475m on October 18th 2010, the two duly acknowledged the assessment.
However, on December 1st 2010, the two oil firms reneged on their promise and lodged an objection to the earlier assessment.
According to reports, the tax body played by the whims of the firms and subsequently revised their tax assessment on February 24th 2011 to USD 467m.
The two warring parties reached a decision on March 15th 2011 with URA agreeing to reduce the second assessment by 30%, a decision that would see Tullow pay USD141m.
Tullow went ahead and filed an Application to have the new assessment reviewed by the Tax Appeals Tribunal on March 25th 2011. They also protested the assessment and objection by URA.
However, the Tax Appeals Tribunal ruled in favour of URA and also quashed the second assessment made by URA and ordered Tullow to pay USD407m.
Tullow appealed the decision of the Tribunal in the High Court.
But before the High Court could determine the merits of Tullow’s Application, URA reportedly entered into a consent judgment with Tullow, upholding the USD407m amount ruled on by the Tax Appeals Tribunal.
However, despite agreeing to pay USD407M, Tullow is yet to pay up the pending USD157m balance approximately Shs564bn.
The private contract entered by the two sides clearly stipulated that the money had to be paid in five working days, and failure by Tullow to honour the agreement, the consent agreement would be rendered null and void.
It is believed government officials behind this debacle and signed the consent judgment on behalf of Government were Hilary Onek, former Minister of Energy and Mineral Development.
His other partners were; Fred Kabagambe Kaliisa former Permanent Secretary Ministry of Energy, Harriet Lwabi Acting Solicitor General, Allen Kagina, Commissioner General URA at the time.
The others on the team were Doris Akol who was Secretary to URA Board and Graham Martin, General Counsel to the two Tullow firms.
But the powers exercised by those officials is being questioned; “We invite the Committee to interest itself in who exercised the authority to enter into a consent judgment in a case, which URA had won before the Tax Appeals Tribunal,” read in part the petition tabled by members of Civil Society.
The Income Tax Act gives the Minister of Finance the powers to waive taxes, but on the confidential consent agreement, his signature appears nowhere.
Surprisingly, in their response to Tullow, URA had put it to Tullow that the Minister of Energy has no powers to waive taxes stating; “The Minister of Energy & Mineral Development has no authority under the Petroleum Exploration and Production Act to grant tax exemptions or tax waiver.”
The March 15th 2011 agreement reached upon these two parties was sealed and marked Private and Confidential.
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