The government of Uganda has hit Tullow Oil with a tax bill of $407m (£237m), after its appeal against the charge was rejected. CEO Aidan Heavey has vowed to consider all options in challenging the ruling.
Following the completion of a farm-down of 66% of its assets in Uganda to China National Offshore Oil Corporation (CNOOC) and Total in 2012, Tullow was issued with a CGT assessment by the Uganda Revenue Authority (URA) of roughly $472 million. In order to launch the appeal, Tullow had already paid 30% of the Capital Gains Tax (CGT) assessment, equivalent to around $142m. Tullow will now also have to pay the balance plus the interest accrued.
The Tax Appeals Tribunal (TAT) ruling will require significant further legal evaluation, said Tullow, due to its complexity, but the FTSE 100 company stressed that it had not been ruled against on the “key issue” of the express tax exemption contained in a Production Sharing Agreement for Exploration Area 2.
Following the news’ publication, shares in Tullow quickly slid 1.77% to 776p.