Kenya: Ola Energy Gets Orders Against URA Tax Charge

Kenyan oil marketer, Ola Energy (formerly OiLibya), has filed and obtained orders barring the Uganda Revenue Authority from demanding Ush2.48 billion ($647,558) in import taxes.

In an application made by the Uganda-based subsidiary Libya Oil Uganda Ltd (LOUL) and lodged at the East Africa Court of Justice's sub registry in Nairobi, Ola Energy wants the Attorney General's office of Uganda and its agent, the URA, stopped from collecting the money until the matter is heard and determined by the regional court's First Instance Division.

The EACJ has issued orders restraining the URA from collecting the taxes until the matter is heard and determined at a date to be determined this week.

"Pending the hearing and determination of this application, a temporary injunction is issued restraining the URA from taking any enforcement action, including the issuance of agency notices to enforce the impugned decision dated January 31, and the subsequent demand issued on February 24," said the Registrar of the EACJ in a notice.

Already ravaged

In the application, LOUL said the import tax is discriminatory and if implemented will cripple the operations of the company and render it insolvent especially in an economy already ravaged by the coronavirus.

"The Attorney General of Uganda, through its agent URA, issued the applicant with a decision dated Jan 31, where it made a finding that certain lubricant products imported by the applicant from its parent company's (OLA Energy Kenya Ltd) manufacturing plant in Kenya did not qualify for preferential treatment as originating from Kenya, thus imposing a tax liability of Ush2.48 billion ($647,558)," reads the application made under a certificate of urgency.

LOUL, which has been embroiled in a trade dispute with URA over the past five years, also argues that the URA acted in breach of the EAC Treaty, EAC Common Market and Customs Union protocols on Rules of Origin in demanding variant taxes each time it imported oil from Kenya.

In the application, LOUL argues that URA sent a demand notice on February 24, 2020 requesting the payment of Ush2.48 billion ($647,558) be paid within 14 days from the date of demand.

Ola Energy, which rebranded from OiLibya last year, is the local subsidiary of Tamoil Africa Holdings Ltd.

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