The battle over oil money is not about to end. Now a concerned Ugandan has dragged the tax body to court for collecting less money in an out-of-court settlement with Tullow Oil instead of getting exactly what had been ordered by the tax appeals tribunal, writes DERRICK KIYONGA.
Jackson Wabyona, a Ugandan citizen, has gone to the Commercial court challenging a deal in which Uganda Revenue Authority (URA) agreed to take less money from Irish firm Tullow Oil than what the tax appeals tribunal had ordered the company to pay.
Wabyona says it was wrong for URA to take only $250m from Tullow Uganda Limited and its affiliate company Tullow Operations Pty Limited instead of the $407m the tax tribunal had ordered in 2014.
Wabyona argues in court documents that such a deal was “symptomatic of fraud, illicit enrichment and corruption involving collusion and connivance by URA, Tullow Uganda Limited and Tullow Operations Pty Limited.”
“There is [neither] legal nor economic nor financial nor rational basis on record to justify why the respondent [URA] accepted to take fewer taxes of $250m instead of $407m...that had been assessed by the tax appeals tribunal,” Wabyona says.
This comes at a time when several government officials, many of them from URA, are being quizzed by parliamentarians regarding the Shs 6bn ‘handshake’ they reportedly received for winning the Heritage Oil and Gas tax case in London.
Some Ugandans have said it amounted to fraud as there was no legal basis under which the money was paid to them.
In 2011, Tullow Uganda Limited and Tullow Operations Pty Ltd filed an application before the Tax Appeals Tribunal challenging initial assessments of income tax of $472.7,748,128 (Shs 1.2tn) by URA in respect of a transfer of their interests in Exploration Areas EA1, EA2 and EA3 to China National Offshore Oil Company (Cnooc) and Total at cost of $2.9bn.
The said assessments were eventually revised by URA to $467.2m as being capital gains tax. Tullow Uganda Limited and Tullow Operations Pty Limited appealed to the tax tribunal.
In the 2014, the tribunal chaired by a one Asa Mugenyi ordered Tullow Uganda and Tullow Operations Pty Ltd to pay capital gains tax of $407m basing on the evidence provided before the tribunal as being the amount after the pre- investment relief.
The total amount of capital gain tax before the pre-investment relief was $542.7m. Tullow Uganda appealed the decision of the tribunal in the Commercial court which resulted into an out-of- court settlement which is now being contested.
Through Nyanzi, Kiboneka & Mbabazi advocates, Wabyona says that Commercial court erred by allowing URA, Tullow Uganda Limited and Tullow Operations Pty Limited to enter an agreement reversing the decision of the tax appeals tribunal.
According to Wabyona, the mistake by court was as a result of not applying the statute law and case law thereby letting URA collect less than what had been decreed as payable by the tax appeals tribunal.
“There is an error apparent on the face of the record whereby the material issues appealed against from the tax appeals tribunal in the Commercial court were not determined and have never been determined by court,” Wabyona says.
“Additionally, the impugned decree /order [out-of-court settlement] is an illegality and a nullity that ought to be erased from the court record.”
Wabyona says court should revoke the agreement because URA has no power to waive or vary taxes imposed by law. Wabyona argues in court documents that issues of taxation cannot be a subject of compromise between URA, Tullow Uganda Limited and Tullow Operations Pty Limited since such an agreement amounted to altering the law.
“Only the appellant court, in this case the Commercial court, has the jurisdiction to reverse a decision of the court below, that’s the tax tribunal,” Wabyona says.
“The parties cannot consent to reverse a judgment of a competent tribunal or court.”
Wabyona says it is only just and proper for court to review the agreement between URA and the oil company.
“That the result of the review will be to recover the taxes lost and uncover the corruption and fraud involved in entering the impugned decree / order between the third [URA] respondent and the first [Tullow Uganda Limited] and second [Tullow Operations Pty Limited],”Wabyona says.
URA and Tullow Oil are yet to file defense. Efforts to reach both URA and Tullow Uganda for a comment were futile.