The applicants argued that the Minister would exercise his powers under S. 2 (e) and grant an exemption to the transfer of interests as it was incidental or connected with the foregoing.  With all due respect, to the counsel of the applicants’ position, the Tribunal does not think that this is a correct interpretation of the powers conferred on the Minister under the PEPA. The granting of a tax exemption has nothing to do with the granting of a licence, renewal or regulation of oil exploration, oil production or development operations.   Counsel for the applicants cited the case of Scottish Widow Plc v RCC [2010] STC 2133 where the courts stated; “… the phrase ‘in connection with’ generally merits a wide interpretation…”  However wide an interpretation the Tribunal may give to the words “incidental to or connected with the foregoing” under S. 2 of the PEPA, it cannot stretch its imagination and perceive how a minister can grant an income tax exemption under PEPA.

In the above case, Lord Hamilton at para. 77 noted: “In some contexts, though not always, the problem may be solved by substitution of the words ‘having to do with’”. Granting a tax exemption has nothing to do with licensing or regulating the conduct of an oil operator. He cited Bank of Scotland v Dunedin Property Investment Co Ltd 1998 SC 657 at 671 where Lord Kirkwood observed: “For my part I am prepared to accept the words “in connection with” are capable of a wide construction and in a case of this nature I would be prepared to accept that it would be sufficient if it was demonstrated that there was a substantial relationship in a practical business sense.” Lord Hamilton noted on p. 2208, para. 78: “I doubt whether any useful guidance can be drawn from the construction of “in connection with” in these very different contexts. Here it is associated with the phrase ‘part of ‘(a transfer of a business). The latter phrase would import that the addition (or transfer) of the amount was an integral element of the transfer of the business. ‘In connection with’ imports a less immediate but not a tenuous relationship with a transfer of the business. Perhaps ‘in association with’ would here be the closest equivalent.”

The applicants should not give the phrase “incidental to or connected with the foregoing” an over- inflated application. The “connection with” should be practical and substantial. Licence do provide for tax exemptions.   Black’s Law Dictionary (supra) p. 777 defines “incidental” as: “adj., Subordinate to something of greater importance; having a minor role”. The Tribunal feels that this is the definition a reasonable man should use. It is difficult to understand how a reasonable man would perceive the ITA as being subordinate to the PEPA.

The PEPA deals with exploration and production of oil, while the ITA deals with law relating to income. Income tax is created under the ITA. S. 4 of the ITA imposes income tax. The long title of the ITA reads: “An Act to consolidate and amend the law relating to income tax and for other connected purposes”. If there is any connection between the ITA and the PEPA it is too remote to consider it under S. 2 of the PEPA.   All legal powers and authorities emanate from the Constitution. Under the Uganda Constitution a tax is imposed through a law passed by Parliament. This is clearly stated in Article 152 of the Constitution of Uganda which reads: “(1) No tax shall be imposed except under the authority of an Act of Parliament. (2)  Where a law enacted under clause (1) of this article confers powers on any person or authority to waive or vary a tax imposed by that law, that person or authority shall report to Parliament periodically on the exercise of those powers, as shall be determined by Law.” The above Article reminds one of the Boston Tea Party of 16^th December 1773 where American colonists had a problem of paying taxes to Britain when they had no representation in British Parliament.

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