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URA defeats Airtel in shs1.5 billion case.

URA defeats Airtel in shs1.5 billion case.

Airtel Uganda MD Manoj Murali (courtesy photo)

The Supreme Court of Uganda has upheld the Uganda Revenue Authority’s (URA) right to retain Shs1.5 billion from telecom giant Airtel. Airtel had contested this payment, which it inherited from Celtel, and had argued that it should not be liable for the outstanding tax. This liability had been passed down through several telecom mergers and acquisitions, with Airtel ultimately inheriting it from Zain.

The disputed amount included Excise Duty, Value Added Tax, and Penal Tax, totaling around Shs1 billion, along with accumulated interest. The URA’s claim stemmed from an audit into Celtel’s financial affairs before it was sold to Zain and subsequently to Airtel.

The Supreme Court, comprising a panel of five judges, including Chief Justice Alfonse Owiny–Dollo, ruled unanimously against Airtel’s claim. Justice Elizabeth Musoke, leading the judgment, emphasized that the Penal Tax had been lawfully collected and rejected the Court of Appeal’s findings that it had been suspended during the tax objection proceedings.

Furthermore, the Supreme Court directed Airtel to cover the legal costs incurred by the URA throughout the various court proceedings.

The Supreme Court’s decision also reinstated the High Court’s findings, which stated that Airtel’s objection to the tax assessment did not exempt it from paying Penal Tax, which is imposed on individuals or institutions that fail to submit their tax returns by the due date. The Penal Tax carries a 2% penalty.

The ruling overturned the Court of Appeal’s previous judgment, which had held that Airtel should not be penalized for seeking redress from the Tax Appeals Tribunal and paying 30 percent of the assessed tax. The Supreme Court argued that this decision was not in accordance with relevant tax laws, as Penal Tax is applicable when tax payment deadlines are missed.

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