By Musa Mugoya
Africa-Press – Uganda. The Tax Appeals Tribunal’s (TAT) recent relaxation of the requirement for taxpayers to pay 30% of the assessed tax before filing an appeal is a welcome relief.
Tax disputes are often high-stakes, especially when businesses face financial strain. Under current law, a taxpayer who objects to a Uganda Revenue Authority (URA) assessment must first pay 30% of the assessed tax before approaching the TAT.
For many taxpayers, raising this deposit in a single lump sum is difficult, if not impossible. Without compliance, the taxpayer is barred from having their case heard by the Tribunal.
Historically, attempts to challenge the 30% deposit rule on constitutional grounds, citing the right to a fair hearing, have been unsuccessful. Similarly, proposals to use bank guarantees as an alternative to upfront payment have been rejected by the TAT.
However, recent Tribunal decisions provide some relief. Where a taxpayer can make a partial payment of the 30% deposit and requests to pay the remainder in installments, the TAT has shown a willingness to grant this. To benefit from such relief, the taxpayer must demonstrate genuine inability to pay the full amount upfront and propose a feasible installment plan.
This approach is progressive and strikes a balance between the interests of both taxpayers and URA. For taxpayers, it safeguards business continuity and protects economic activity. For the tax authority, it ensures that the public interest is maintained by gradually collecting the due taxes.
The practical effect of this decision is that taxpayers who wish to challenge a URA assessment but cannot pay the 30% deposit in full should not forfeit their right to appeal. They must, however, provide clear and reasonable evidence to the Tribunal of their financial constraints.
It is also important to note that where a tax dispute is purely legal and does not involve the quantum of tax to be paid, the 30% deposit requirement does not apply. In such cases, the taxpayer may file an application without making any deposit.
In conclusion, the TAT’s stance provides taxpayers with a fairer pathway to dispute assessments while ensuring that URA continues to safeguard public revenue. This is a win-win development for both business operations and tax compliance in Uganda.
Mr Musa Mugoya is a tax and estate planning lawyer
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