Miss Turyatemba: Kasita Ibrahim's piece also suggests that Tullow claims the payments they have made do not cover Heritage's tax bill. What information do you have regarding that issue?

Hey Kobina, There is so much I could write about this tax saga. I have decided instead to copy and paste this article that appeared in one of Uganda's independent dailies, The Monitor...it will give you some answers. Also, you could check out the Tullow Oil Plc website and read their press relaeses on the matter...

 

Heritage demands Shs964 billion refund in taxes

Posted by Walter Wafula on Wednesday, May 18 2011 at 00:00 

 

Oil explorer, Heritage Oil and Gas Limited (HOGL), has started pushing for the refund of about $405 million (Shs964 billion) it released in respect of taxes arising from the sale of its oil assets in Uganda. > The demand comes at a time when Uganda is planning to utilise proceeds from the sale of oil and gas assets to fund the construction of its largest hydro electricity power dam on the River Nile at Karuma. On Monday, Heritage announced that it had started international settlement proceedings against the government in respect of about $405 million (Shs964) billion capital gains tax which it partly paid before it was cleared by its bitter partner Tullow Oil plc.> The proceedings are due to take place in London where Tullow has also filed a court case against Heritage over the non-payment of about $313.5 million due to Uganda in income tax. Tullow paid this money to government to get approval to sell its interest in Blocks 1, 2 and 3A to Total and the China National Offshore Oil Company. “The position of both Heritage Oil Plc and HOGL is based upon comprehensive advice from leading tax experts in Uganda, the United Kingdom and North America; the disposal of the interests in Blocks 1 and 3A is not taxable in Uganda,” Mr Tony Buckingham, the chief executive officer, Heritage, said in a news statement. But the government holds that the sale of assets in Uganda attracts a 30 per cent capital gains tax as outlined in the Income Tax law.
> Oil companies like Tullow Oil Plc classify intangible exploration and evaluation agreements to exploit natural resources as assets in their financial statements. “As long as the assets are in usable condition they attract capital gains tax,” Mr Paul Kyeyune, the Uganda Revenue Authority Public and Corporate Affairs Manager, said. Last year, Heritage deposited $121 million with the Uganda Revenue Authority account after the tax body claimed about $405 million as capital gains tax accruing from the sale of its oil and gas exploration interests in oil Blocks 1 and 3A, to Tullow Oil.
> The entire deal was valued at $1.5 billion but Tullow Oil only paid $1.045 billion for the assets. Heritage also released $283.45 million to an escrow account at Standard Chartered Bank following Tullow’s admission that it paid the tax liability. Heritage is now seeking a decision requiring, among other things, the release of their entire amount released to the government including what was recently paid by Tullow Oil to Uganda. Heritage claims that the government “wrongfully or unreasonably” withheld consent to the sale by HOGL of the rights under the Production Sharing Agreements for Blocks 1 and 3A.