The applicants had one year from February 2012 to February 2013 to re-invest in asset of a like kind. Since the applicants closed their case in November 2012, they still had three months to February 2013 to re-invest in an asset of a like kind. Therefore the Tribunal will give them an extension of three months from the date of the ruling.   6.4 CONCLUSIONS AND ORDERS OF THE TRIBUNAL   Having taken into consideration the evidence adduced, the submissions of all parties the Tribunal wishes to summarise it findings as below:

1. In respect to EA2

1.1The Tribunal finds that Article 23.5 of the EA2 PSA was intended to cover capital gains tax arising from the disposal of interests in the PSA. 1.2The Tribunal further finds that Article 23.5 of the EA2 PSA is invalid under the tax laws of Uganda and therefore the applicants are not entitled to an exemption from the payment of capital gains tax. 1.3The Tribunal also finds that the applicants cannot rely on the principle of legitimate expectation as their expectation was not legitimate.

2. In respect of all the PSAs.

2.1The Tribunal also finds that the respondent is allowed to reduce the cost base by the excess costs incurred by the applicants in the subsequent transfer of their interests. However the respondent did not satisfy the Tribunal on how it arrived at the amount of the excess costs incurred by the applicants and adjustments were made accordingly. 2.2 The Tribunal finds that the applicants did not discharge the burden placed on them to prove to the satisfaction of the Tribunal the actual expenses they incurred in order for them to be allowable. However the Tribunal took into consideration the expenses admitted by the respondent and those that were proved to its satisfaction to compute and make adjustments to the gain made by the applicants. 2.3 The Tribunal finds that the ‘last in first out’ (LIFO) and “first in first out’ (FIFO) accounting methods proposed by the parties have no legal basis. The Tribunal applied the averaging method or equitable proportions in apportioning the different interests that were transferred by the applicants.

3. In respect of the re-investment relief.

3.1The Tribunal finds that the disposal of 16.67% of their interest by the applicants was involuntary. 3.2 The Tribunal finds that the applicants are entitled to a re-investment relief of up to 25% of the interests they disposed of. 3.3The Tribunal also finds that the applicants are still entitled to an extension of time to furnish evidence of re-investment in an asset of a like kind.   Basing on the above findings the Tribunal orders that:   1)    The applicants pay capital gains tax of US$ 407,095,366 basing on the evidence adduced before the Tribunal being the amount after the pre-investment relief. The total amount of capital gain tax before the pre-investment relief was US$ 542,793,821. 2)    The applicants will deduct the statutory 30% paid from the US$ 407,095,366 and the balance outstanding shall attract an interest of 2% per month from the date of this ruling till payment in full. 3)    The applicants are entitled to a re-investment relief of US$ 135,698,455. 4)    The applicants shall furnish the respondent with evidence of re-investment in an asset of a like kind to the tune of the abovementioned amount in clause 3 within three months from the date of this ruling. The said re-investment in an asset of a like kind should have been made in the period between 21^st February 2012 and 21^st February 2013. In the event the applicant does not comply with this order the said relief or that amount of relief which has not been proved will crystallise into capital gain tax on the expiration of the said period and will attract interest of 2% per month till payment. 5)    Under S.19(c) of the Tax Appeal Tribunal Act the portion in respect of the re-investment relief is remitted to the respondent to effect as stated herein above. 6)    The Tribunal orders that the applicants pay two-thirds (2/3) of the costs of this application to the respondent. The Tribunal notes that the applicants were successful in some issues approximately a third and are entitled to a reduction in the costs.

Lastly, the Tribunal wishes to thank counsel of all the parties for the time and effort taken in the preparation and presentation of their cases. As the respondent had noted in their submission, that this is the biggest case (in monetary terms), involving the largest transaction of US$ 2.9 billion, in the legal history of Uganda. Both parties obtained representation from within and across the continent, which the Tribunal allowed in order to get to the bottom of the problem. We can say we have not been disappointed. The preparation by both parties was meticulous with a lot of effort put in.

The submissions by the parties, though hefty, involved a lot of research. The applicants, as taxpayers are commercial enterprises aiming at profit maximisation are entitled to challenge any tax assessments imposed on them. The respondent, as a revenue collecting body, should not consider it as inappropriate or attempts at “manipulation of figures” when its assessments are challenged. In its collection of taxes the respondent should not attempt to kill the hen that lays golden eggs. The task of the Tribunal is clearly to resolve any tax dispute in accordance with the law, which we have done.

Dated at Kampala this ……………………….day of…………………………2014     …………………………..              ………………………………………….         ……………………………… Mr. Asa Mugenyi                     Mr. George Wilson Mugerwa                       Mr. Pius Bahemuka Chairman                                   Member                                                          Member

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