Uganda Revenue Authority (URA) will not have to reimburse about Shs1.1 trillion to Heritage Oil after United Nations Commission on International Trade Law (UNCITRAL) ruled in its favour in a London court on Tuesday.

The legal battle between Uganda and Heritage Oil Tax which emerged after the latter sold its stake to Tullow has been going on since 2011. Should the case have gone the oil company’s way, it would mean that URA would have had to surrender Shs1.2 trillion it collected from the company as a Capital Gains Tax.

Capital Gains Tax is a tax on the profit when you sell (or dispose of’) something (for example an asset) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.

Landmark

“The award is a historic ground breaking precedent on stabilisation clauses and duty of oil companies to meet their tax obligations. It is a true testament to URA’s resolve to assess, collect and defend taxes in local and international adjudication bodies,” Mr Ali Ssekatawa, assistant commissioner litigation URA, stated. He added: “We pay tribute to URA, government team and the external lawyers Curtis, Prevost Mallet for their unbreakable spirit and professionalism.”

According to Uganda statement issued by the tax body yesterday, on February 24, the UNCITRAL Tribunal in the Heritage arbitration against Uganda issued a unanimous award dismissing all claims and ordering Heritage to pay more than $4 million (about Shs11.5 billion) of costs incurred by Uganda in connection with the case.