The Commissioner General of the Uganda Revenue Authority (URA), John Rujoki Musinguzi, has publicly expressed his concerns over a ruling by the Commercial Division of the High Court of Uganda.
The court ruled that URA must refund $45 million, plus interest, to Heritage Oil and Gas Limited.
This ruling comes after the court determined that the tax authority had erroneously computed the Capital Gains Tax (CGT) in the 2010 sale of assets from Heritage Oil to Tullow Oil, a deal valued at over $1.5 billion.
The court's judgment stems from a case where Heritage Oil challenged the Uganda Revenue Authority’s decision to impose CGT on the sale of its Ugandan assets to Tullow Oil.
Heritage argued that the tax authority had incorrectly calculated the capital gains, as it failed to factor in the exploration costs incurred by Heritage, which amounted to $150 million.
This omission, the court concluded, significantly impacted the CGT liability and, by extension, led to the overcharging of tax on the transaction.
The ruling mandates URA to refund the excess tax collected, which is estimated at $45 million, with additional interest.
This ruling is a significant win for Heritage Oil, which had been contesting the tax body’s calculation for years, citing that the sale of their Ugandan assets was unfairly taxed.
In an exclusive interview with NBSTV, Commissioner General John Rujoki Musinguzi addressed the ruling, making it clear that the Uganda Revenue Authority does not agree with the court's decision.
Musinguzi described the ruling as “unfair” and emphasized that the URA had followed the correct procedures in determining the capital gains tax owed by Heritage Oil.
“We believe that the ruling was not based on a fair interpretation of the law and the facts at hand,” said Musinguzi.
“Our position is that the costs associated with the sale of assets, including exploration costs, were adequately considered when calculating the tax obligations.”