Guide to Resolving Tax Disputes in Uganda

Guide to Resolving Tax Disputes in Uganda
  • Any form of transaction between two parties can bring about disputes if both of them are not on the same page regarding the rules guiding their business conduct. This is why a guide to settling tax disputes is necessary.

This guide to resolving tax disputes in Uganda applies to the tax system, especially when one of the parties (usually the tax authority) suddenly decides to change the rules of the game, either through tax increases or any other way.

It can also be a result of both parties (tax authority and taxpayer) not having a harmonized understanding of the applicable tax laws.

This takes us to the tax system in Uganda where the Uganda Revenue Authority’s tax collection targets have increased and the country intends to increase its tax-to-GDP ratio.

Factors like these are the reasons why taxpayers need to familiarize themselves with ways through which they can resolve tax disputes.

Guide to Resolving Tax Disputes in Uganda : A Ugandan Perspective

Tax disputes often arise due to one of the parties (URA or the taxpayer) or both not possessing a detailed knowledge of the relevant facts or they have different opinions regarding the applicability of certain laws to the given facts.

This can happen as a result of the intricacy and periodic revisions of the already enormous volume of tax laws.

Guide to Resolving Tax Disputes in Uganda

To begin, it is important to know that Uganda operates a self-assessment system of tax collection whereby a taxpayer, guided by the different tax statutes, is required to determine the amount of tax that they are expected to pay and pay it.  

Although, the URA occasionally conducts compliance checks to confirm that the taxpayer has paid the correct amount that is expected of them.

The Objection Stage

If after the assessment, the taxpayer doesn’t agree with the URA’s conclusion, the next step is to formally object within 45 days of receipt of the notice of assessment.

The taxpayer should ensure that the objection letter deals with all the questionable points that have been raised by the URA.

This is because any item not objected to in the letter will be regarded as agreed to.

Another function of the objection letter is that it can be used as evidence if the issue eventually proceeds to the Tax Appeals Tribunal (TAT) for review.

The URA has an autonomous and qualified department that deals with such objections and a decision are usually made within 90 days.

The objection stage can lead to three endings:

1. The objection may be completely allowed and the taxpayer is free from any tax liabilities; or

2. The objection may be partially allowed and adjustment will be made accordingly; or

3. The objection may be completely disallowed and the assessment will stand as it is.

The Review Stage

In this stage, a taxpayer who doesn’t agree with the decision can apply to the Tax Appeals Tribunal (TAT) for a review.

The taxation decision can be contested on the grounds of illegality, irrationality, or procedural impropriety.

1. If the application to TAT is for review of a taxation decision, the applicant is expected to lodge it within 30 days from the time the applicant received a notice of the decision.

2. If the application is for the review of an objection decision, it should be lodged within 6 months following the date of the decision.

In either of the cases, a taxpayer who is unable to file within the specified time for one reason or the other can apply to TAT expressing real reasons why he/she was not able to apply in time. TAT will then use its discretion to either allow or deny the application.

Also note that when a taxpayer applies with TAT, they are required to pay 30% of the tax assessed for that part, not in dispute, whichever is greater, as refusal to pay means the applicant would have no locus to present their case to the tribunal.

If the taxpayer is not satisfied with the TAT’s decision, they can appeal to the High court and eventually the Supreme Court.

To conclude our thoughts on a guide to resolving tax disputes in Uganda, we would advise that taxpayers settle disputes with the URA outside Tax Appeals Tribunal (TAT) or Court.

This approach is known as Alternative Dispute Resolution, and it is the best option as it is less stressful and time-consuming compared to the other options.

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The information contained herein is general and is not intended, and should not be taken, as legal, accounting or tax advice provided by Taxmobile.Online Inc to the reader. This information remains strictly the opinion of Taxmobile.Online Inc.

The reader also is cautioned that this material may not apply to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of other tax factors if any action is to be contemplated. The reader should contact his or her Tax Advisers before taking any action based on this information.

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