{"id":23006,"date":"2021-12-15T16:20:06","date_gmt":"2021-12-15T16:20:06","guid":{"rendered":"https:\/\/www.africa-press.net\/uganda\/?p=23006"},"modified":"2021-12-15T14:37:16","modified_gmt":"2021-12-15T14:37:16","slug":"parliament-passes-new-law-to-cap-recoverable-oil-costs","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs","title":{"rendered":"Parliament passes new law to cap recoverable oil costs"},"content":{"rendered":"

Africa-Press – Uganda. <\/strong><\/span>Parliament yesterday unanimously passed the Income Tax Act 2021, giving the government powers to set a cap on recoverable costs by oil companies.<\/p>\n

The Committee of Finance, Planning and Economic Development in its report told the House that until 2008, there was no specific taxation regime provision for oil operations in the Income Tax Act Cap 30.<\/p>\n

However, some production sharing agreements (PSA\u2019s) contained some tax provisions and obligations and that the ITA thus provides for a comprehensive set of income tax rules that accords with the commercial principles under which the oil sector operates.<\/p>\n

The report said in spite of the provision for corporate and windfall tax under the Income Tax Amendment Act, 2008, there were loopholes in the law regarding cost oil and recoverable costs for each financial year.<\/p>\n

The recoverable costs are pooled together each year and reduced by cost oil received.<\/p>\n

It said the 2021 amendment of the ITA comes to solidify the amendments that were made in 2017, which provided for deductible costs for the oil production contract areas.<\/p>\n

While debating the Bill yesterday, Mr Kiwanuka Keefa, the committee chairperson, said the main purpose of the Act is to amend the Income Tax Act Cap 340, to cap allowable deductions per year to the cost recovery limit for contract area 1, 3A and license area 2 and to introduce a windfall tax for contract area 1, contract area 3A and license area2.<\/p>\n

\u201cThis has arisen out of the fact that the current law does not cater for the volatility in oil prices. There is, therefore, need to impose a windfall tax in the event that the international oil price equals $75 per barrel or more on any day of the year of income. This is therefore intended to capture the additional revenues arising in the event that the international oil prices rise,\u201d he said.<\/p>\n

Mr Kiwanuka said the committee in its meeting with various stakeholders observed that Clause 1 (2a) and (2b) of the Income Tax Amendment Bill provide for a framework under which recoverable costs can be managed and said this is a welcome amendment as it limits international oil companies from spending on unnecessary items that are likely to supersede the limits set by the law on cost recovery.<\/p>\n

\u201cThe committee observed that windfall tax is a tax levied by government against industries that have benefited the most from the prevailing economic bonanza or conditions causing those industries to experience above average profits. The Committee welcomes the amendment, which shall allow government to benefit from the volatility of oil prices,\u201d he said.<\/p>\n

Mr Matia Kasaija, the minister of Finance, said government was excited and will continue to work with different representative to pass laws that benefit the entire country.<\/p>\n

\u201cI have been in this House since 1979 and this is the first time I am seeing different parties working together. I am happy with the approach you have used of consulting each other before coming here. Instead of coming to… embarrass each other, you did consultations before and the process has been smooth. I congratulate you for that approach,\u201d he said.<\/p>\n

The Minister of Energy, Ms Ruth Nankabirwa, said the amendment gives government powers to ensure that Ugandans benefit from the oil revenues.<\/p>\n

\u201cI ask Parliament to expedite the process of sending the Bill to the President for assent so that we can start undertaking the contracting processes as soon as possible,\u201d she said.<\/p>\n

Some amendments<\/b><\/p>\n

“<\/b><\/p>\n

The Parliament amended Section 89GA of Income Tax Act by inserting immediately after subsection (1) the subsections which states that \u201cnotwithstanding subsection (1), the amount that a licensee for Contract Area 1, contract area 3A and licence area2 may deduct, in relation to petroleum operations undertaken in the respective areas in a year of income shall not exceed the cost recovery limit in the respective petroleum agreements.\u201d<\/p>\n

For More News And Analysis About Uganda<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Uganda. Parliament yesterday unanimously passed the Income Tax Act 2021, giving the government powers to set a cap on recoverable costs by oil companies. The Committee of Finance, Planning and Economic Development in its report told the House that until 2008, there was no specific taxation regime provision for oil operations in the […]<\/p>\n","protected":false},"author":84,"featured_media":23005,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,8],"tags":[233,240,234],"class_list":["post-23006","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-homepage-english","tag-africa-press","tag-africa-press-uganda","tag-uganda"],"yoast_head":"\nParliament passes new law to cap recoverable oil costs - Uganda<\/title>\n<meta name=\"description\" content=\"Parliament yesterday unanimously passed the Income Tax Act 2021, giving the government powers to set a cap on recoverabl ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Parliament passes new law to cap recoverable oil costs\" \/>\n<meta property=\"og:description\" content=\"Parliament yesterday unanimously passed the Income Tax Act 2021, giving the government powers to set a cap on recoverabl ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs\" \/>\n<meta property=\"og:site_name\" content=\"Uganda\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2021-12-15T16:20:06+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2021\/12\/img-61b9fd87a4139.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"480\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Parliament passes new law to cap recoverable oil costs\",\"datePublished\":\"2021-12-15T16:20:06+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs\"},\"wordCount\":646,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2021\/12\/img-61b9fd87a4139.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Uganda\",\"uganda\"],\"articleSection\":[\"all news\",\"economy\",\"homepage-english\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs\",\"url\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/parliament-passes-new-law-to-cap-recoverable-oil-costs\",\"name\":\"Parliament passes new law to cap recoverable oil costs - 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