RE: Ugandan farmdown key back to £1.50 - £2.007 Apr 2020 18:33
Sources said that Mr Pouyanné quietly visited the country in early March during the Presidential Investors’ Roundtable at State House, Entebbe, during which he held a meeting with President Museveni.
The meeting was a follow up to Mr Pouyanné’s visit last October when he held a closed-door one-on-one meeting with the president. The March meeting was a “good one and paved a way forward,” said our source, who prefers to remain anonymous.
At last year’s meeting, the two principles agreed to consult their teams and arrive at a harmonised position, which was agreed upon last month.
The contentious issues include the treatment of a capital gains tax on the transaction worth $185m (Shs673bn) payable over a period of 25 years.
The president’s dilemma was to either forego or revise the levy in order to unlock a final investment decision worth about $10bn for Uganda’s oil projects.
The second issue is a disagreement over how much costs the oil firms can recover before paying corporate income tax at the point of oil production; the firms want the government to lift its limit. The more costs the company book, the less tax they will pay.
However, the government insists that the cap on recoverable costs will not be lifted. It also wants the firms to pay the taxes before oil production starts, in line with the Income Tax Amendment of 2017. But because the tax is imposed on profits, the oil firms argue that is being charged on imagined profits. The third issues was the economics of the planned oil pipeline to Tanzania’s coast.
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