Tanzanian President John Magufuli and Ugandan President Museveni signed a deal which features waving of taxes on materials used in construction of crude oil pipeline between Hoima district to Tanga port.
It shows commitment of both the countries is towards having the oil pipeline and potentiality for the investors to pump i some money for the project and to complete it in time.
The signed pact reads, “The value added tax should be deemed paid during the three years of the construction phase.”
Both the presidents said the two nations will be reviewing application of the branch profit tax after the competition of the pipeline company structure.
Attorney generals of both the countries have also been directed for the agreed-positions in the inter-governmental agreement. The ministers of energy will be signing by Friday.
The agreement mentions as five percent depreciation of assets and to be counted as expense and so should go untaxed.
The project will be implemented as fast as possible to get the first oil by 2020
Earlier this year in January Uganda and Tanzania hired Gulf Interstate Engineering for the study of Front- End Engineering Design to know exact estimates of pipeline requirement.
The proposed pipeline is 1,445 km in length and to cost up to $3.5 billion. Tanzania was preferred over Kenya as the country has large flat terrain and there were less issues with land management.
Tanzania also has less environment impact compared to Lamu in Kenya.