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Uganda Revenue Authority wins 1.5BN lawsuit against Airtel Uganda

Court has dismissed a petition by Airtel Uganda Limited, a telecommunications company that dragged Uganda Revenue Authority (URA) over interest regarding a Value Added Tax assessment. In a June 18 ruling, Commercial Court’s Justice Godfrey Kiryabwire concurred with the URA legal team and upheld the Shs 1,556,836,915 interest slapped on Airtel Uganda Limited.

“The plaintiff’s case is that the Tax Appeals Tribunal, High Court and Court of Appeal did not award interest to the defendant and, therefore, is not entitled to it,“ Kiryabwire said, adding that in earlier petitions, neither the Tribunal nor the High Court awarded interest.

But quoting section 65 (3) of the VAT Act, the judge said: “In my view, the law is very clear and unambiguous and it should be construed in the strict sense.”
Citing two past cases involving URA, Kiryabwire said: “In other words, statutory interest is payable where it is provided for in the tax laws.

“From the authorities above, it is clear that once the words of the statute are clear and unambiguous, there is no need to make further inferences from a tribunal or courts on the payment of interest. In short, therefore, the defendant has the right to claim for the interest because it is provided for under the law.”

The quashed petition stems from a tax assessment URA raised against then Celtel between April 2000 and July 2003. It was based on phone credit locally known as “airtime”, which is said to have been given to staff.

The total tax assessed was Shs 1,024,209,566. Of this, 30% of the tax assessed totalling Shs 183,544,232 was paid before Celtel run to the Tribunal, High Court and Court of Appeal. However, the three upheld the defendant’s (URA) assessment, hence further payment of Shs 428,269,883.

Subsequently, URA demanded interest totalling Shs 1,556,836,915. It is this demand which the company unsuccessfully tried to block. Justice Kiryabwire added: “........I find that payment of 30% of the tax in accordance with section 15 of the Tax Appeals Tribunal Act does not absolve the taxpayer from paying penalties in the event that the disputed tax under the act is found to be payable.”

Commenting on the win, a URA legal officer, who spoke on condition of anonymity, said another precedent had been set.

“It is of great significance and importance to the administration of tax laws because it emphasises that where a statute provides that interest is payable on assessed tax, then the court does not need to pronounce itself on the same,” the officer stated, adding: “If it is provided for in the statute, that suffices.”

Celtel, as it was known then was the pioneer mobile phone service provider in the country in the 90s, forever changing communication in Uganda. Over time, it has changed ownership and names first to Kuwait-based Zain on August 1, 2008 and later to India-based Bharti Airtel in 2010. And following the takeover, it was named Airtel Uganda Limited.

The writer works for URA’s Public and Corporate Affairs office.

The Observer Newspaper

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