Uganda’s Panama Papers leaks reveal oversight gaps

panama-papersIn 2010, just before Heritage Oil and Gas Limited sold its licences for exploration in Uganda, the company changed its domicile from the Bahamas to Mauritius.

Mauritius, the Eastern African island nation, has a no-double-tax agreement with Uganda, meaning Heritage Oil could avoid paying a $400 million capital gains tax on the $1.4 billion deal. It’s a move that the Ugandan Revenue Authority challenged in court and won.

Emails recently released through the Panama Papers leaks illustrate how Heritage attempted to dodge taxes and back up what the Ugandan government already knew. And with renewed public interest in the case, tax and justice activists are calling on government to renegotiate double tax treaties. They contend that weak regulations are still an issue.

“The biggest benefit of these leaks is for us to be able to put our house in order,” said Jane Nalunga, Uganda director for the Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI).

“… (I)f a country is known to be a tax haven, then we shouldn’t have a double taxation treaty with it,” she added. “So these leaks are going to help us to strengthen our arguments. So the biggest advantage is the policy framework that we are going to put in place will be more strong and tight.”

Many have pointed out that $400 million could make a substantial difference in Uganda’s health care sector. This is especially true for rural clinics, where shortages of medicine and basic supplies and a lack of health care professionals are common.

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