Tullow workers at a rig in Buliisa in western Uganda. FILE PHOTO |
What you need to know:
Jack Wabyona, a private citizen, filed a notice of motion in court on February 21 against URA, Tullow Uganda and Tullow Uganda Operations Pty seeking that Tullow be ordered to pay all taxes due and URA be found culpable for acting beyond its legal mandate.
In a dramatic turn of events the two sides quickly resolved their legal differences and reached a settlement that bars either party from pursuing the matter further.
Wabyona hopes to reopen the appeal that was abandoned in favour of the settlement.
Tullow Oil has taken a plea against $407 million tax award to the Court of Appeal after an unsuccessful attempt to have the matter defeated on technical grounds at the High Court’s Commercial Division.
The tactic employed by Tullow, if successful, will close any investigations into the matter, where the company’s integrity and that of Uganda Revenue Authority has been challenged. Any improper act by Tullow, for instance, if proven, would result in complex legal trouble for the oil giant under the UK Bribery Act, 2010.
The company, however, is yet to file an appeal that gives grounds or points of disagreement with the lower court. Tullow has remained cagey on the matter.
“I can only confirm that Tullow has appealed the ruling, but I cannot give reasons,” said Abdul Kibuuka, Tullow’s spokesman.
Jack Wabyona, a private citizen, filed a notice of motion in court on February 21 against URA, Tullow Uganda and Tullow Uganda Operations Pty seeking that Tullow be ordered to pay all taxes due and URA be found culpable for acting beyond its legal mandate.
The notice of motion was instigated by growing public concern that the government reached a compromise on a lower payment of $250 million from Tullow oil through the Tax Appeal Tribunal that heard the dispute had ordered Tullow to pay capital gains tax of $407 million.
It was argued that Tullow would reinvest part of money accruing from the farmdown – it earned $2.9 billion and it was within its plan to reinvest $136 million in a project that would not attract capital gains tax if it did so within 3 months from the date of the decree on August 15, 2014.
“In the event the applicant does not comply with this order, the amount of relief, that has not been proved, will crystallise into capital gains tax on the expiration of the said period and will attract interest of 2 per cent per month till full payment,” the TAT decree read.
The amount arose from a capital gains tax assessment in 2012 following a farmdown of Tullow’s interest in Total E&P and China National Offshore Oil Company.
Aggrieved with the decision, Tullow appealed to the High Court, “The tribunal erred in law when it ruled that a provision in PSA was invalid under the laws of Uganda and therefore, the appellant was not entitled to an exemption for payment of capital gains tax in respect of gains made on the disposal of the appellant’s interest,” read the notice of appeal filed on 14, August, 2014.
In a dramatic turn of events the two sides quickly resolved their legal differences and reached a settlement that bars either party from pursuing the matter further.
“The appellant shall pay to the respondent $250 million in full and final settlement of the tax assessment in accordance with the settlement deed,” read the decree entered before the High Court.
Mr Wabyona hopes to reopen the appeal that was abandoned in favour of the settlement. But before the matter was set for hearing on merit, Tullow moved to court, seeking orders that Wabyona has no legal basis to bring up the matter and seeking dismissal of the case with costs.
They argued that the case had been terminated by mutual consent of the main parties.
