URA to appeal ruling in tax dispute case with Heritage Oil

The Uganda Revenue Authority (URA) has said that it will appeal against the High Court ruling that ordered the tax body to pay over Shs900 billion to Heritage Oil over wrongful tax assessment.

URA Commissioner General John Musinguzi said they have  already initiated the legal process to appeal the case together with the Attorney General.  

 “There is no need for alarm. This is the same old case that was ruled on by the Tax Appeals Tribunal, where Heritage’s claim not to pay CGT was dismissed with costs. Their appeal to the High Court was also dismissed, and they went for arbitration in London,” he told journalists.

URA is supposed to pay UGX 709 billion to Heritage Oil and Gas Ltd for erroneously slapping a Capital Gains Tax of UGX 164.4 billion and UGX 542.5 billion in interest after the oil company sold its exploration stake in Uganda to Tullow Oil. 

The Commercial Division of the High Court on 23rd December 2024 ordered URA to refund Heritage Oil refund the excess money it had collected in Capital Gains Tax. This followed an appeal of the 2010 Tax Appeals Tribunal decision that favored URA.  

But Musinguzi revealed that arbitration on all the grounds agreed with URA, and the Government of Uganda was awarded USD 4 million. “As far as I know, Heritage has never paid that money,” he stated, adding, “This was one of our grounds of objection as URA, seeking payment of this award first because we had been looking for them in vain.”  

The Commissioner General further noted that this case is appealable, emphasizing that it’s the same case URA has successfully won under various legal frameworks. 

“It’s not fair that somebody comes here, makes an investment, and when they earn, they refuse to pay tax,” he said.

Justice Susan Abinyo on 23rd December 2024 ruled: “Accordingly, this court makes the following declarations and orders: 1) The computation of the Capital Gains Tax excludes the sum of USD 150 million, which formed part of the cost base and is therefore not subject to tax. 2) The respondent shall compute the Capital Gains Tax by the order in (1) above, and the appellant shall be entitled to a refund of the excess sum in the contested amount”.

“The computed amount in (2) above, and as required under section 31 (2) of the Tax Appeals Tribunal Act, Cap. 341 (Revised Laws of Uganda, 2023 Edition), the respondent shall pay statutory interest to the appellant on the excess tax at a rate of 2 percent per month, prescribed in section 123(4) of the Income Tax Act, from the date the appellant paid the excess tax till the respondent refunds the tax in full.”