By FAUSTINE KAPAMA-Judiciary
OIL and Gas Exploration Company, Statoil Tanzania AS, is to
pay over 170m/- to the Commissioner General of Tanzania Revenue Authority (TRA)
as stamp duty on Farm-Out Agreement executed with ExxonMobil Exploration and
Production Tanzania Limited (ExxonMobil) outside Mainland Tanzania.
This followed the decision of the Court of Appeal to dismiss
with costs the appeal lodged by Statoil Tanzania AS, currently known as Equinor
Tanzania AS, the appellant, against the decision of the Tax Revenue Appeals
Tribunal, which reversed the findings of the Tax Revenue Appeal Board on the
matter.
“(……) we find no merit in the appeal. Consequently, we
dismiss the appeal in its entirety with costs,” Justices Rehema Mkuye,
Panterine Kente and Paul Kihwelo declared in favour of the TRA Commissioner
General, the respondent into the appeal.
They concluded after going through the record of appeal that
the appellant's case was weak to discharge its burden of proof that he complied
with the tax exemption regime as required by the law.
“It could not ride on the weaknesses of the respondent which
in our view is not the case in the instant appeal before us. We are satisfied,
as the Tribunal did, that the appellant had no strong case. Consequently, we
find that, the Tribunal was right in reversing the Board's decision,” the
justices said.
During hearing of the appeal, the counsel for the appellant
had complained, among others, that his client was prejudiced by the respondent
issuing notice of confirmation of assessment without first issuing the
objection determination letter.
The counsel argued that failure to receive the letter of
determination deprived the appellant's right to know detailed reasons for
refusal and therefore prepare properly their grounds of appeal to the Board.
In their judgement delivered in Dar es Salaam recently, the
justices hastened to state that such argument, as the State Attorney for the
respondent had termed it, was a mere afterthought since the appellant conceded
himself that the notice of confirmation is as good as the final determination.
They thought, in all fairness to the parties, the appellant
could not be heard now to complain for something he condoned and actually
benefited from at the early stages of the proceedings before the Board without
which the matter would have been struck out by the Board for being premature.
“Entertaining the appellant's invitation, would amount to
shifting goal posts in order to unfairly benefit the appellant something we are
not prepared to extend that far,” the justices said.
They momentously observed that the respondent had requested
from the appellant further information including the Production Sharing
Agreement (PSA) as one of the necessary documents for determination of the
objection, but the appellant elected not to heed to the request.
“In our considered opinion, even if the respondent was to
make determination, it had nothing upon which to make determination,” the
justices said.
The appellant is a limited liability company incorporated
under the laws of Tanzania and its principal business is exploration of oil and
gas in Tanzania since 2007. One of the areas where the appellant was operating
was Block 2, situated within Tanzania's Exclusive Economic Zone.
Epicenter of the dispute is the demand notice for stamp duty
issued by the respondent to the appellant, following a comprehensive tax audit
exercise conducted on August 19, 2013 into the tax affairs of the appellant.
Such tax affairs covered stamp duty, withholding tax, Value
Added Tax (VAT) and Pay as You Earn for the year of income 2011 and came to the
conclusions that, there was a tax liability to the tune of 170, 414, 448/-
arising from the Farm-Out transaction on Block 2 between the appellant and
ExxonMobil.
In such transaction, the appellant assigned its petroleum
rights under the PSA to ExxonMobil. Apparently, on April 18, 2007, the
appellant had signed a PSA with the Government and Tanzania Petroleum
Development Corporation (TPDC) in respect of Block 2 offshore Tanzania
Mainland.
The appellant claimed that, according to Article 27 (e) of
the PSA, he was excepted from any liability connected with assignment and
operations of the sites. The appellant, unamused with the demand notice, lodged
an objection before the respondent contesting it.
However, the objection was not successful. Meanwhile, during
the objection process, the respondent, orally informed the appellant that the
disputed amount had already been deducted from his VAT refunds which were due.
Aggrieved by the respondent's decision, the appellant
knocked the door of the Board challenging it. Upon full determination, the
Board found in favour of the appellant, something which triggered the
respondent to lodge the appeal before the Tribunal seeking to reverse the
decision of the Board.
Upon hearing the parties, the Tribunal allowed the appeal in its entirety and quashed the decision of the Board, something which precipitated the filing of the appeal by the appellant to the Court of Appeal.
Hakuna maoni:
Chapisha Maoni