Uganda wants to introduce tough new income tax rules so that oil companies pay tax on revenues once production starts and from the sale of oil block stakes, a senior government official said today.
East Africa's third largest economy is poised to become a top-50 oil producer with Tullow Oil expected to begin commercial production in the final quarter of next year. It aims to produce 200,000 barrels per day by 2015.
'We recognise that we're soon advancing to the production phase in our petroleum sector and the amendments we've proposed to our income tax law are necessary to maintain an effective and progressive fiscal regime,' Fred Omach, state minister for finance, said.
Uganda is embroiled in a tax dispute with British oil explorer Heritage Oil over the payment of capital gains tax after it said it sold its Uganda assets to Tullow Oil. Uganda says the deal is incomplete until tax on all capital gains is paid.
Experts said the changes followed concerns that firms might make windfall gains which go untaxed. They added that the penalties proposed for violation of the amendments were pretty tough.
