The Uganda Revenue Authority (URA) has initiated an appeal process against the High Court ruling that favoured Heritage Oil in a long-standing tax dispute case.
URA Commissioner General, John Musinguzi, expressed dissatisfaction with the court decision and confirmed that the tax body has begun the legal process to appeal the case, in collaboration with the Attorney General.
“We are not satisfied with the court decision and we have already initiated the legal process to appeal the case together with the Attorney General,” Mr Musinguzi told journalists.
He emphasized that URA has successfully won this case under various legal frameworks, including arbitration in London, where the Government of Uganda was awarded USD 4 million.
“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 Capital Gains Tax (CGT) was dismissed with costs,” Mr Musinguzi stated.
“Their appeal to the High Court was also dismissed, and they went for arbitration in London. 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.”
Mr Musinguzi argued that it is unfair for companies to invest in Uganda, earn profits, and then refuse to pay taxes.
“It’s not fair that somebody comes here, makes an investment, and when they earn, they refuse to pay tax,” he added.
The High Court ruling, delivered on 23rd December 2024, ordered URA to refund Heritage Oil UGX 709 billion, comprising UGX 164.4 billion in Capital Gains Tax and UGX 542.5 billion in interest. This followed an appeal of the 2010 Tax Appeals Tribunal decision that favoured URA.
The court ruled that 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.
“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,” the ruling reads in part.
The URA Commissioner General assured that the appeal process is underway, emphasizing that the case is appealable.
“We have already initiated the appeal process, and we are waiting for guidance from the Attorney General,” Mr Musinguzi said.
