Uganda Revenue Authority has in the last 3 months, won twelve tax suits worth UGX102,841,980,995 in the Tax Appeals Tribunal. The rulings that were made between March and May 2020 mostly pertain to Value Added Tax (VAT), Excise Duty, Withholding Tax and Income Tax.
URA also won a High Court case filed against it by Fuelex Uganda Limited claiming that URA had caused the loss of 76,000 litres of assorted fuel as well as UGX164,245,100 and Kshs. 500,000 in cash when the revenue body raided and took over Fuelex Nalukolongo petrol station in search of contraband fuel on the 21st of December 2009.
The single biggest case in value won, was brought against the tax body by the National Social Security Fund (NSSF Uganda) seeking to vacate an assessment of UGX 30,521,703,065 as principal tax in respect of contributions made by NSSF members. The assessment also accrued UGX12,196,875,941 in penal interest. NSSF objected to the assessment and lodged a case with the Tax Appeals Tribunal (TAT), which on 27th March 2020 upheld URA’s principal assessment, but vacated the penal interest.
The second biggest ruling was against telecom company, MTN Uganda for UGX 24,273,771,472 made on 28th May 2020. The case emanated from a technical issue- whether the taxable value of excise duty on airtime is chargeable on usage or at the point of sale. The tribunal accordingly agreed with URA that excise duty on airtime is chargeable at source and therefore upheld URA’s assessment.
MTN which had earlier successfully challenged in the high court the same assessment, reducing it from UGX 326,996,917,906 claimed by URA in 2016, bringing it down to the UGX 24,273,771,472 above, said it would appeal the TAT ruling.
“To prevent an overpayment of the reconciled amount, which is significantly lower than UGX 24,273,771,472, MTN on May 29th 2020 obtained an interim order against the enforcement of the several agency notices issued by URA,” said the telecom company in a media statement.
“MTN is a responsible and ethical corporate citizen committed to meeting all its lawful obligations including all taxes that are properly assessed and are due and owing. MTN is studying the TAT ruling, taking advice on the implications thereof and will make every effort to conclude this matter in a fair, legal, and ethical manner,” MTN further reiterated.
However MTN, had earlier on, 19th May 2020 lost another UGX20 billion VAT case against URA. In terms of total value, MTN was the biggest loser against URA, losing a combined UGX44.3 billion worth of cases.
Telecoms tower company, ATC Uganda also on the 26th May 2020 lost its UGX24.2 billion challenge against URA. The tax body slapped the multi-billion tax demand on the tower company, for failing to withhold tax on interest payments paid to its mother company, Uganda Tower Interco BV (UTI) domiciled in the Netherlands. ATC Uganda in 2012 borrowed USD124,500,000 from UTI to buy towers from MTN Uganda at 6.56% interest per annum. Interest repayments attract withholding tax at source, which ATC Uganda had failed to withhold.
URA welcomes the rulings
Ian Rumanyika, the tax body’s Manager Public and Corporate Affairs in a statement to CEO East Africa welcomed the rulings.
“When cases delay in court, they tie up revenue which should have been collected in time. But it is also not fair to the ones who are compliant and are diligently paying taxes. For this reason the Taxpayer is required by law to pay 30% of the taxes in question before the case can be heard.
He also advised tax payers to avoid unless it is absolutely necessary the costly process of litigation.
“It is however costly on those that choose the court way, because if the taxpayer loses the case, he will have to pay the taxes assessed plus interest. Interest doesn’t stop accumulating; it keeps on growing. We congratulate the URA in-house legal team on the win and dedicate the win to those that are tax compliant,” he said.
Other wins secured by URA, include Jutrade General Agencies (UGX294.4 million), Prompt Supply 2011 Limited (UGX186 million), Norborok Uganda Ltd (551. 7 billion), Livingstone International University (UGX666.3 million) and LEDs Uganda Limited (UGX627 million). Other wins were secured against Aviation Hanger Services Ltd (UGX384 million), Red Concepts Ltd 9UGX138 million), and Afgri Uganda Ltd (UGX913 million).
The revenue body, however, lost 5 cases worth UGX1.4 billion to Red Chilli Hideaway (UGX101 million), COWI A/S (UGX371.4 million), Airtel Uganda (UGX208.8 million), Britam Insurance Company Limited (UGX250 million) and The Cooper Motor Corporation (U) Ltd (UGX503.2 million).