April 13, 2016
In 2010, just before Heritage Oil and Gas Ltd. sold its licenses 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. 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.