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Tullow Oil Vs Uganda Revenue Authority Before the TAX APPEALS TRIBUNAL

Tullow Oil Vs Uganda Revenue Authority Before the TAX APPEALS TRIBUNAL

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Published by The New Vision
A matter that required attention over taxes unpaid by Tullow Oil by Uganda Revenue Authority after the sale of stake in some oil wells
A matter that required attention over taxes unpaid by Tullow Oil by Uganda Revenue Authority after the sale of stake in some oil wells

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Categories:Types, Legal forms
Published by: The New Vision on Jul 16, 2014
Copyright:Traditional Copyright: All rights reserved

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07/19/2014

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THE REPUBLIC OF UGANDAIN THE MATTER OF THE TAX APPEALS TRIBUNAL TAT APPLICATION NO. 4 OF 20111.TULLOW UGANDA LIMITED2.TULOW OPERATIONAL PTY LTD …….....................………… APPLICANTSVERSUSUGANDA REVENUE AUTHORITY ………......................……..…… RESPONDENTRULING
This ruling is in respect of an application brought by the applicants challenging initialassessments of income tax of US$ 472,748,128 by the respondent in respect of a transfer of their interests in xploration !reas !1, !2 and !" to #%%# and Total for theconsideration of US$ 2,&"",""',4''( The said assessments )ere e*entually re*ised by therespondent to US$ 4+7,271,&71 being capital gains tax( The applicants being aggrie*ed by thesaid assessments appealed to the Tribunal(This ruling is brought after the Tribunal has complied )ith S( 1" of the Tax !ppeals TribunalT!T- !ct( .r( .artin /eeta, one of the members of the panel listening to the dispute passeda)ay on the 2'
th
 .ay 2'14( !t the time of his passing a)ay, all the parties had presented their e*idence, closed their cases and made their submissions( 0eli*ery of the ruling )as pending( !tthe time of his passing a)ay the then Tribunal had reached a decision( %n the 1+
th
 une 2'14,)hen the matter came up for ruling, the parties )ere informed that the Tribunal did not ha*e thelegally reuired #oram to deli*er a ruling( #ounsel for the parties agreed that a ne) member should be assigned to the panel to replace .r( .artin /etaa( 3t )as also agreed that matter bereheard by the record of e*idence being a*ailed to a ne) member under S( 1"- of the Tax !ppeals Tribunal !ct )ithout the need of recalling )itnesses( .r( 5ius 6ahemua )as appointedto replace the deceased( The record of the e*idence and the submissions of the parties ha*ebeen handed to him( Though the Tribunal cannot say that this is a ruling of four members as the#oram is three, it can say that this is a unanimous decision(
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1.SUMMARY OF CASE
The facts agreed upon by both parties are1(The first applicant, Tullo) Uganda 9imited hereinafter called :TU9;-, is registered under thela)s of the 3sle of .an and )as formerly nergy !frica Uganda 9imited :nergy !frica;-(The second applicant, Tullo) Uganda %perations 5ty 9imited hereinafter called :TU%5;- isregistered under the #orporations !ct 2''1 in <estern !ustralia and )as formerly =ardman !frica 5ty 9td :=ardman;-( The applicants are residents for tax purposes in Uganda(2(%n the 8
th
 %ctober 2''1, both the applicants and the >o*ernment of Uganda :>%U;-executed a 5roduction Sharing !greement 5S!- under )hich they )ere grantedexploration, de*elopment and production rights in xploration !rea !2 the :!2 5S!;-( 3t)as signed by =on( Syda ( .( 6bumba, .inister of .ineral and nergy 0e*elopment for and on behalf of the >o*ernment, by .r( d)ard ohn llyard .anaging 0irector- on behalf of =ardman and by .r( <(! el #hief %perating %fficer- on behalf of nergy !frica( "(!nother 5S!, in relation to !1, )as entered into on the 1
st
 uly 2''4 the :!1 5S!;-bet)een nergy !frica, =eritage %il and >as 9imited :=eritage;- and the >%U( The !15S! )as signed for and on behalf of the >%U by =on( 0audi .igereo, .inister of State for nergy, also holding the portfolio of the .inster of .ineral and nergy 0e*elopment, by .r(6rian Smith on behalf of =eritage and by .r( ?him)aan >asaut on behalf of nergy !frica(4(!nother 5S!, in relation to !"!, )as entered into on the 8
th
 September 2''4, bet)eennergy !frica, =eritage and the >%U :the !"! 5S!;-( The !"! 5S! )as signed for anbehalf of the >%U by =on( Syda ( .( 6bumba, .inster of .ineral and nergy0e*elopment, by .r( 6rian Smith on behalf of =eritage and by .r( !ndre) <yndham onbehalf of nergy !frica((=eritage and nergy !frica agreed to continue )ith the oint %perating !greement :%!;-bet)een =eritage and nergy !frica entered into on the 2&
th
 !ugust 2''2 for !", under )hich the first applicant@s participating interest )as 'A(
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+(5rior to 2''&, Tullo) %il 5lc, the parent company of both applicants, acuired the nergy !frica >roup, )hich had a subsidiary, )hich later became TU9( Tullo) %il 5lc later acuiredthe =ardman >roup, including =ardman !frica 5ty 9imited, )hich later became TU%5(Tullo) %il 5lc acuired the rele*ant subsidiaries@ rights and interests in the 5S!s in Uganda( 7( !t this stage the interests in the 5S!s )ere as follo)sa( TU9 held 'A of !1, !2 and !"!Bb( TU%5 held 'A of !2B and c( 'A of each of !1 and !"! )as held by =eritage and the interests then held by TU9 in!1 and !"! are hereinafter referred to as :the %ther %riginal 3nterests;( 8(The applicants through their exploration acti*ities disco*ered hydrocarbons in the respecti*eexploration areas(&(%n or about the 17
th
 anuary 2'1', TU9 in*oed its preCempti*e rights under the %! for thepurchase of 'A participating interests of =eritage in xploration !reas !1 and !"! the=eritage interests;- at a consideration of US$ 1,4',''',''' United States 0ollars onebillion four hundred and fifty million-, subDect to appro*al from the >%U(1'(%n about the 2+
th
 anuary 2'1', TU9 and =eritage signed a Sale and 5urchase !greementthe :S5!;- under )hich TU9 )ould acuire =eritage@s 'A participation rights in xploration !reas !1 and !"!(11(%n the +
th
 uly 2'1', the >%U granted a conditional appro*al to the transaction bet)een=eritage and TU9( 12(%n the 18
th
 %ctober 2'1', the respondent raised assessment number S!E9T%E2+& of US$"&',&24,4+' and assessment number S!E9T%E27' of US$ 84,&&&,++' on TU9 and TU%5respecti*ely being income tax #apital >ains Tax-(1"(%n the 1
st
 0ecember 2'1', the applicants obDected to the assessments(14(%n the 24
th
 /ebruary 2'11, the respondent made an obDection decision that adDusted theassessment on the TU9( The assessment o( S!E9T%E2+& of US$ "&',&24,4+' )asamended to US$ "87,748,4+&, )hile assessment o( S!E9T%E27' of US$ 84,&&&,++' )as
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