The Money Pipeline: How the Netherlands - Uganda Tax Agreement is denying Uganda a fair share of oil revenues
Uganda has been blessed with large oil resources, the 4th largest in sub-Saharan Africa.2020 is now a turning point for Uganda as the Final Investment Decision of the mega project led by French major TOTAL and Chinese CNOOC is on the verge of materialization. TOTAL CEO expressed that this project is part of their strategy of developing ‘cheap’ projects. The country has already lost – according to its revenue authority – more than $3 billion in tax incentives and exemptions to multinational companies in a period of 6 years, and has failed to materialize its promises to dedicate at least 15% of its budget to the health sector. Uganda is also marred by a specific issue: none of its current nine Double Tax Agreements (DTAs) comply with international best standards according to the IMF, a situation regularly denounced by many in Ugandan civil society. Oxfam estimates that the government of Uganda will miss out on $287 million over the 25 years of exploitation of the project – for one Exploration Area (or block) only out of the four of the project. This amount – which represents only a likely very small portion of all tax leakages for the 4 Exploration Areas - would already be close to 5.7% of the overall potential government revenues stemming from the project and represents a very partial estimate of the potential missing revenues from the Dutch-Uganda DTA, as based on one block only.
