Heritage Oil loses bid over tax dispute

22nd Sep 2011 16:22

Heritage Oil has lost its bid to suspend proceedings over a tax dispute arising from its sale of interests in Uganda last year. Since the Ugandan High Court made the ruling last week, the government has continued to seek to recover at least $404m in taxes levied on Heritage's $1.45bn sales of stakes in two blocks in the Lake Alvertin Rift basic to Tullow Oil last year. Ugandan attorney general Peter Nyombi said: "The government is taking and will continue to take all prudent steps necessary to defend itself. Both the tax appeals tribunal and the high court ruled that the tax dispute should be resolved within Uganda." Uganda's tax appeals tribunal had suspended the proceedings in August pending the high court ruling. International arbitration over the same dispute is also underway in London. Law makers in Uganda have called on the speaker to reconvene parliament from recess for an emergency session to discuss the dispute. In March, the Ugandan government signed an agreement with Tullow which separated the tax dispute from Tullow's $2.93bn deals with France's Total SA, and China's CNOOC.However, Tullow was forced to pay $313m as security for the unpaid tax bill and in April Heritage received a claim from the London high court in which Tullow is seeking to recover the funds.Heritage then began action against the Ugandan government in May, saying the sale of its assets in Uganda doesn't attract a capital gains tax based upon "comprehensive advice" from leading tax experts in Uganda, the U.K., and the U.S.The share price fell 7.60% to 224.80p by 16:36. NR