Tullow and Africa Oil engages govt over new tax
What you need to know:
- Earlier this month President Uhuru Kenyatta said Kenya will introduce CGT in the extractive sector “within a couple of months”.
- On Thursday, Parliament recommended reintroduction of the tax on profit made from the sale of shares and property.
Oil prospectors in the country are engaging the government to ensure that a new taxation regime does not curtail investor interest in the country’s new growth sector.
Africa Oil and Tullow Oil, both major players in Kenya’s upstream sector, said neither should the introduction of a capital gains tax (CGT) and windfall taxes affect their fund-raising programmes for the next phase of development for the discovered oil resources.
Earlier this month President Uhuru Kenyatta said Kenya will introduce CGT in the extractive sector “within a couple of months”.
On Thursday, Parliament recommended reintroduction of the tax on profit made from the sale of shares and property.
The tax charge remains suspended since 1985 when it stood at 30 per cent. MPs in the budget committee said reintroduction of the tax would help raise over Sh8 billion in new taxes.
Tullow said in an e-mail: “There are changes that have been proposed under the Finance Bill, which Tullow along with other companies within the oil and gas sector in the country are engaging with Government on. CGT would only apply if we sold down our assets and this is not part of our current plan.”
Africa Oil said: “We are aware that the Government is considering a range of taxes on the extractive sector as part of the draft 2014 Finance Bill. We are working with the Government to ensure that any such consideration does not stifle the still early stage exploration phase of the industry’s development in Kenya”.
Ministry of Energy officials say they expect the first oil to flow in 2017. Evaluation of tenders for the crude oil pipeline project, key for timely commercialisation of the resource, is underway.
