Ugandan government scraps taxes on oil, gas, mining exploration

FRED OJAMBO

KAMPALA, Uganda (Bloomberg) -- Uganda abolished taxes on its emerging oil, gas and mining exploration industries to encourage growth, Finance Minister Matia Kasaija said.

“We shall only start taxing you when you start production,” Kasaija said at an oil conference Tuesday in the capital, Kampala.

The announcement follows talks between the government and the Uganda Chamber of Mines and Petroleum to have companies exempted from value-added and withholding taxes during the investment phase of projects.

Elly Karuhanga, the chairman of the chamber, said in February that the tax burden on exploration companies can be as high as 39%, increasing costs in a “highly capital-intensive sector.”

Uganda is on the cusp of oil production, with companies including London-based Tullow Oil, China National Offshore Oil and France’s Total jointly developing discoveries estimated at 6.5 Bbbl of resources.

Ugandan President Yoweri Museveni in June announced the country had discovered deposits of minerals including columbite-tantalite, cobalt, copper, tin and gold in the East African country.