On Wednesday a court in Uganda ruled that UK-listed oil giant Tullow Oil must now pay the country $407 million, after declaring that tax incentives the company had benefitted from were illegal. But this great news is only part of the story of a country starting to stand up for a fairer tax system.
Ugandan revenue authority wins $400m case against Tullow Oil
This week’s ruling is significant as it shows how the world’s poorer countries can take action to ensure they get a fair deal from the multinational corporations that operate there. In the case against Tullow Oil, the company had been granted a tax break as part of an investment agreement with the government – however the court ruled that this agreement with Tullow was illegal, because the individuals that had originally negotiated the agreement didn’t have the authority to do so.
ActionAid campaigners across Africa have been pushing governments to stop giving away harmful tax breaks in the mistaken belief that they encourage investment. ActionAid’s "Give us a break" report showed that developing countries lose out on $138 billion through these deals every year.
Responding to the judgement against Tullow, Arthur Larok, ActionAid Uganda’s Country Director said:
“The Ugandan Revenue Authority’s win over Tullow is evidence that big foreign companies’ self-benefitting accounting practices can be countered and combatted by tax authorities in developing countries. We need our taxes for our own development.”
ActionAid’s campaign pushing tax justice up the agenda in Uganda
This week’s news is just the latest development in a country increasingly moving against an unfair tax system that deprives the government of vital revenues.
In 2013 ActionAid’s international tax campaign launched in Uganda, raising issues of tax justice and how tax avoidance affects people living in poverty. Communities across the country took action and over 40,000 people joined the campaign against unfair tax treaties and multinational companies’ use of tax havens.
ActionAid Uganda research has found that many of the international tax treaties the Ugandan government has signed are leaving the country short-changed. Tax revenue that should finance development is being given away by allowing companies to move profits out of the country at low to zero rates.
Uganda has signed fifteen tax treaties, of which five are still waiting for final ratification, however, ActionAid Uganda’s analysis shows that there is no clear evidence that the country has benefited from the tax treaties already ratified.
Ugandan government rejects unfair tax deals
Responding to the campaign, the Ugandan government has listened to the huge wave of public pressure and announced it will stop negotiating and signing all tax treaties until it has a policy in place to make sure the country is getting a fair deal. This is a huge step forwards in a country where one in fifteen children die before their fifth birthday.
The international campaign against tax dodging is growing. Many of the world’s poorer countries are standing up to unfair tax rules and tax dodging companies to demand they get their fair share.
Join campaigners around the world demanding tax justice and add your voice: