For years, businesses have been frustrated by Uganda Revenue Authority (URA) insisting they owe large sums, not because of new tax decisions, but because URA’s internal ledger shows ‘outstanding’ balances.
The ledger tracks payments, interest, penalties, waivers, and URA’s allocation of those amounts.
Companies often paid what they believed was due and even obtained waivers that cancelled old interest and penalties, only for the ledger to continue reflecting large debts.
When firms asked URA to explain or correct the figures, they were typically told that before the Tax Appeals Tribunal (TAT) could hear them, they had to deposit 30 percent of the amount shown by the ledger.
Locked out
For taxpayers facing balances in the tens of billions, that upfront payment was impossible, effectively locking them out of justice.
That context frames Aggreko International Services versus URA, now a key decision in Uganda’s tax dispute jurisprudence.
Aggreko, a foreign company that formerly generated and supplied electricity in Uganda, was registered for VAT, income tax, and pay-as-you-earn.
On May 17, 2023, URA issued a notice claiming Aggreko owed about Shs44.6b, which was later narrowed to Shs33.7b.
But Aggreko argued the amount in dispute was not created by any lawful assessment, saying the figure arose from URA’s internal re-allocation of earlier payments, shifting money to interest and penalties that Aggreko believed had already been paid or formally waived.
Aggreko appealed to TAT, challenging URA’s allocation method and insisting the ledger had manufactured a false debt.
URA raised a preliminary objection, arguing that the Tribunal cannot hear a dispute unless a taxpayer pays 30 percent of the tax in dispute, in which case Aggreko would have to pay about Shs10.1b.
Aggreko disagreed, arguing that the 30 percent only applies where URA has issued a formal assessment and the taxpayer has objected to it.
In this case, URA had issued no default or additional assessment that legally created the Shs33.7b – the figure existed only in the ledger, a ledger, Aggreko noted, was an internal record, not a legal tax decision.
Aggreko also noted that the dispute was about whether URA complied with the law when applying payments.
The law requires payments to go to principal tax first, penalties second, and interest last.
Because the case was about applying the law rather than recalculating amounts, Aggreko invoked the Fuelex Exception, which removes the 30 percent requirement for pure questions of law.
In its findings, TAT agreed, noting that the 30 percent requirement applies only to a taxpayer who has objected to an assessment issued by URA.
TAT also rejected URA’s claim that the ledger itself could be treated as an assessment, noting that the ledger was only a record.
If URA issues an assessment, it appears as a specific entry, but ledger balances do not become assessments by default.
Thus, in Aggreko’s case, TAT found no URA assessment underpinning the Shs33.7b, a figure that was purely a product of URA’s internal allocation.
Fuelex Exception
Finally, TAT found the Fuelex Exception applied, with the only question being whether URA had lawfully applied the law in allocating payments.
Under the law, the 30 percent rule is meant only for disputes over the amount of assessed tax, and forcing deposits in interpretation-only cases may even be unconstitutional.
Therefore, TAT dismissed URA’s preliminary objection and allowed the case to proceed to a full hearing.
The lesson here is that when a dispute is about how URA allocated payments in its ledger, the 30 percent requirement doesn’t automatically apply.
The law requires a valid URA assessment and a formal objection to it. And where the issue is purely legal, the Fuelex Exception protects taxpayers from being blocked by unaffordable deposits. URA’s ledger is not the law: a balance on the ledger alone cannot keep a taxpayer out of TAT.
Bruno Kalibbala, manager of tax, legal, and corporate governance at Grant Thornton, represented Aggreko in this case.