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Plain textWe Can’t Pay Uganda’s $400m Oil Tax - Heritage
Heritage Oil insist they won't pay $400m capital gains tax to government despite ruling ordering them to do so.
The oil company says they will go ahead to avoid the tax and even dispute it in higher courts in Uganda.
Paul Atherton, Heritage’s chief financial officer, said: “Given the publicity this case has generated in Uganda, it was always going to be difficult for the tribunal to rule against government.”
According to Financial Times, Heritage shrugged off the loss of a court case in Uganda over a tax liability of more than $400m over a disputed capital gains charge of the sale of oilfields in the Uganda, arguing that the dispute will ultimately be decided in London courts.
Shares in Heritage lost almost 6 per cent of their value as they slipped by 9.6p to 160.4p on Thursday.
The fall followed the ruling on Wednesday by the Tax Appeals Tribunal in Uganda, which judged that Heritage was liable to pay capital gains tax on the selling on of its interests in oilfields close to Lake Albert to fellow UK listed oil explorer Tullow Oil in a deal that could net Heritage up to $1.45bn.
Heritage insisted that ultimate ruling on the issue will be decided by arbitration proceedings in London as it continued to express confidence that it will avoid the tax charge and continue to dispute it locally through the Ugandan court system.
But he added the company, founded by former mercenary and security adviser Tony Buckingham, firmly maintained its position that no tax was due in Uganda as a result of the sale of the exploration blocks.
“We instigated arbitration in London as provided for in the PSAs [production sharing agreements] as we consider this to be the appropriate avenue and that process is ongoing. We will also continue to vigorously pursue all legal forums open to us against this fundamentally flawed ruling.”
The long-running dispute began in July last year, when fellow London-listed Tullow Oil bought two oil blocks in western Uganda from Heritage for $1.45bn. But Ugandan authorities insisted Heritage remained liable for capital gains tax on this sale.
On Thursday, broker Oriel said the court decision in Uganda “comes as no surprise and should be broadly irrelevant for Heritage as the [PSA] apparently states that the arbitration needs to be completed in London”.
Uganda Revenue Authority (URA) boss Allen Kagina said Monday she expects the Uganda ruling to have a considerable impact on the outcome of London court case.
President Yoweri Museveni has since made it clear he would force Heritage to pay the tax.
“Lawyers advised me to pursue this case in London. They will pay the tax,” Museveni told press recently.
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Updated on 2013-06-04 10:39 |
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