Ugandan government shifts position on deal with Heritage Oil to force company to pay up its Capital Gains Tax

26 Jul 2010 admin

From the Daily Monitor: “The insistence on tax has put the entire deal on ice. The President’s feelings on the matter were put forcefully and emotively by Energy Minister Hilary Onek in a phone interview on Friday. ‘Arbitration only arises in the case of other disputes – not tax,’ Eng. Onek said, warning that the government was ready to take “extreme measures” to ensure that it received its full pay in capital gains tax. One of the sticking points according to Mika Minio-Paleullo of the oil governance group Platform UK is the precedent set by Uganda’s acquiescing to arbitration of the tax dispute abroad. ‘Uganda’s bargaining position was weak because the [Production Sharing Agreements or PSA’s] sets out that disputes are to be resolved through corporate arbitration tribunals in Europe – which almost always rule in favour of the companies,’ he said then in an emailed response to this newspaper.”…

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