Airtel Loses Legal Battle Over Shs1.5b Payment to Uganda Revenue Authority – The Ankole Times

Airtel Loses Legal Battle Over Shs1.5b Payment to Uganda Revenue Authority

Tuesday, September 19, 2023
Supreme Court Rejects Airtel's Shs1.5b Refund Claim Against URA
Hope Turyomurugyendo
3 Min Read

In a recent decision, the Supreme Court has ruled that telecom company Airtel is not eligible for a Shs1.5 billion refund from the Uganda Revenue Authority (URA) as the tax was lawfully collected.

Airtel inherited this liability after acquiring the assets and assuming the obligations of Zain, which had also taken over the tax liability from Celtel in 2010.

The disputed amount resulted from a URA tax assessment, including Excise Duty, Value Added Tax (VAT), and Penal Tax, totaling approximately Shs1 billion, along with accumulated interest. This outstanding tax arose from a URA audit into Celtel’s affairs before it was acquired by Zain and subsequently by Airtel.

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A panel of five judges at the Supreme Court, led by Justice Elizabeth Musoke, delivered a unanimous ruling that upheld URA’s appeal, disagreeing with the Court of Appeal’s previous findings that the Penal Tax had been suspended during the tax objection proceedings.

Other justices involved in this decision were Chief Justice Alfonse Owiny–Dollo, Faith Mwondha, Mike Chibita, and Stephen Musota.

Justice Musoke, in the lead judgment, stated, “The Court of Appeal erred when it ordered a refund of Shs1.5 billion paid by Airtel as unpaid Value Added Tax and Penal Tax accrued during the pendency of the tax objection proceeding instituted by Airtel.” She also ruled that Airtel must cover URA’s legal costs incurred throughout the legal process.

The Supreme Court also reinstated the High Court’s findings, asserting that although Airtel had the right to file an objection before the Tax Appeals Tribunal regarding the tax assessment, lodging the objection did not exempt the company from paying Penal Tax from the date the objection was unsuccessful.

Penal Tax is imposed on individuals or institutions that fail to submit a tax return by the due date, and they are required to pay a penal tax of 2 percent.

The Supreme Court rejected the Court of Appeal’s assertion that Airtel had been penalized by URA for seeking redress from the Tax Appeals Tribunal, and it criticized the appellant court for concluding that an entity objecting to a tax assessment, appealing against it, and paying 30 percent of the tax assessed cannot be penalized under a section of the value-added tax laws.

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According to the Supreme Court, the Court of Appeal’s decision was not aligned with relevant tax laws because penal tax is payable when a person fails to meet their tax obligations by the specified due date.



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Hope Turyomurugyendo has a pivotal role as the Jobs and Tenders Notices Publisher at The Ankole Times. She is driven by a passion for connecting job seekers, entrepreneurs, and businesses with valuable opportunities in Uganda.
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