Kenya plans windfall tax on oil companies

August 05, 2014 | East Africa, Government & Regulations

Nairobi, Kenya | – Kenya will impose capital-gains and windfall taxes on oil, gas and mining companies within months to ensure the East African nation maximises benefits from its mineral resources, President Uhuru Kenyatta said.

“This is something that we are very clear about,” President Kenyatta said in an interview at State House in the capital, Nairobi. “We want to ensure that we as a country also are able to benefit from both the windfall and capital-gains tax.”

The comments are a blow to Tullow Oil and partner Africa Oil, which have found oil reserves in northern Kenya. BG Group is also exploring for gas and Randgold Resources is studying the nation’s potential for gold production. Kenya wants to avoid a similar situation to Tullow’s experience in Uganda, where the company is contesting in court the state revenue authority’s demand that it pays capital-gains tax of about $473m (€352m) following its sale of assets in Uganda. The explorer has paid 30pc of the amount, it said on July 30.

“Uganda has lost a lot of revenue as a result of not really having focused on that,” President Kenyatta said. “We want something that’s fair, but equally recognising that Kenya as a country must benefit from this.”

President Kenyatta’s administration is preparing legislation for the extractive industry as investors demand to expand operations in a more predictable environment.