A Legal Analysis Of Tax Incentives In Encouraging Foreign Direct Investments In The Oil And Gas Sector Of Uganda:

Abstract

This study focused on performing a legal analysis on the role of tax holiday as an incentive for encouraging Foreign Direct Investments in the Oil and Gas Sector of Uganda. The study was guided by two major specific objectives which were to analyze the effectiveness of the laws relating to tax holidays in encouraging FDI and to explore the corresponding flaws associated to offering tax holidays in the Uganda‘s oil and gas sector. The overall study adopted a qualitative doctrinal legal research approach in carrying out the study. The researcher chose a case study research design to guide the investigation process of the legal phenomenon under study used a systematic literature review method as the methodology for collecting data. The study disclosed that the law provides for tax credit under the income tax Act, that imposes heavy tax value added tax under Value Added Tax Act 1996 (VAT), imposes duty tax under the Exercise Management Act (1970) to be paid by the licensee investors. The study further revealed that tax holidays generally places a significant burden on tax administration and on taxpayers at large. It is recommended that other mechanisms like enhanced transparency and overall improvement of investment climate should be used to attract FDI in oil and gas industry.