Home Business Heritage Oil’s Appeal Dismissed by Uganda’s Supreme Court

Heritage Oil’s Appeal Dismissed by Uganda’s Supreme Court

Heritage Oil Loses Supreme Court Appeal in Ongoing $435 Million Tax Dispute
Heritage Oil Loses Supreme Court Appeal in Ongoing $435 Million Tax Dispute
Share this News

The Supreme Court of Uganda has dismissed an appeal by Heritage Oil in a long-running $435 million tax dispute with the Uganda Revenue Authority (URA). The dispute began in 2011 when Heritage Oil sold its oil and gas blocks to Tullow Oil in the Albertine Graben, resulting in a capital gains tax of $435 million.

Heritage Oil had filed an appeal at the Supreme Court in an attempt to challenge some of URA’s arguments made during the High Court case over the tax dispute. However, the Supreme Court unanimously ruled that it lacked jurisdiction to handle this appeal.

The dispute has centered on whether Heritage Oil was liable to pay the tax, with Heritage arguing that the transaction was not taxable in Uganda due to its incorporation in The Bahamas and subsequent registration as a tax resident in Mauritius. Uganda has a double taxation agreement with Mauritius.

Heritage Oil had sought to resolve the tax dispute through the International Court of Arbitration in London, but URA opted for the Ugandan Tax Appeals Tribunal. The tribunal ruled that Heritage was indeed liable for the assessed tax amount of $434.9 million.

Dissatisfied with the tribunal’s decision, Heritage Oil filed two appeals in the High Court, which were later consolidated. During these proceedings, Heritage objected to some of URA’s arguments, but the judge directed both parties to prepare their final submissions, focusing on points of law.

Heritage Oil was not satisfied with this decision and filed an appeal to the Court of Appeal, seeking to overturn the judge’s ruling. The Court of Appeal upheld the High Court’s decision, stating that the judge had not yet heard the main appeal.

Heritage Oil then filed another appeal to the Supreme Court, challenging the Court of Appeal’s decision and asserting that there were errors in concluding that there was no right of appeal from the High Court’s decision in a Tax Appeals Tribunal matter.

In the final ruling, the Supreme Court upheld the Court of Appeal’s decision, emphasizing that at the time of the appeal, there was no entitlement to appeal interlocutory decisions made by the High Court. Although amendments now allow appeals to the Court of Appeal and Supreme Court from tax disputes, these changes came into effect after the Court of Appeal’s decision in this case and are not retroactive.

The $405 million held in an escrow account with Standard Chartered Bank remains at the center of the dispute, with Heritage Oil pushing for its release and URA seeking to retain it along with an additional $30 million as capital gains tax.