Kuku Foods Uganda Ltd, which holds the exclusive franchise for Kentucky Fried Chicken (KFC) in Uganda, is in a tax dispute with the Uganda Revenue Authority (URA) following the reporting of substantial financial losses.
The company, which runs several outlets in Kampala and nearby urban areas, has recently requested an exemption from tax payments and penalties due to operational challenges. However, their appeal was denied by the Tax Appeals Tribunal, escalating tensions from a four-year audit.
Between March 2018 and February 2022, URA amended Kuku Foods’ reported tax losses from UGX 16.8 billion to UGX 8.3 billion, claiming the company underreported its income and included ineligible expenses. Kuku Foods contends that these findings are incorrect and threaten its very existence.
The company has warned that enforcing the revised tax amounts could devalue its business, disrupt its fundraising initiatives, and undermine its competitiveness in Uganda’s saturated fast-food sector, which also features informal vendors offering comparable products.
While URA asserts that its audit was comprehensive, Kuku Foods argues that the financial pressure could lead to job cuts, service reductions, or hindered expansion strategies. The Tribunal’s refusal leaves the company in a precarious position as it tries to balance compliance with its operational sustenance.
Critics point out that the situation underscores the broader difficulties faced by formal businesses competing against Uganda’s informal economy, where tax enforcement is not as rigorous.
As the dispute progresses, Kuku Foods’ appeal highlights the fragile equilibrium between tax responsibility and corporate sustainability in a recovering economy.
The outcome of this case may set a precedent for how Uganda’s tax authorities deal with similar situations involving multinational franchises grappling with intense local competition. For the time being, fans of KFC and employees are left waiting for a resolution that could influence the brand’s future in the region.
