Category Archives: DISPUTE RESOLUTION

Bujagali Energy v URA: TAT Clarifies Foreign Currency Conversion Rules for Infrastructure Taxation in Uganda

Uganda’s Tax Appeals Tribunal has delivered a land-mark ruling with far reaching Tax and commercial implications for East Africa’s infrastructure, project finance and the general public-private partnerships market.

In Bujagali Energy Limited v Uganda Revenue Authority, TAT Application No. 4 of 2024, the Tribunal was asked to determine the reckoning event when foreign currency denominated project costs should be converted into Uganda Shillings for purposes of computing the historical cost base of depreciable assets, for purposes of ascertaining the capital deduction allowances for those assets. 

The application challenged administrative additional income tax assessments arising principally from the interpretation of section 56(2) of the Income Tax Act, which governs the conversion of forex amounts into Uganda Shillings for tax reporting purposes, where the taxpayer has with the commissioner’s permission kept books of accounts in a foreign currency for tax reporting purposes.

The Tribunal favored the “date the amount is incurred” as the primary reckoning event for cost-base construction, where currency conversion tax rules are in purview. 

The decision is important because many infrastructure SPVs in Uganda and across East Africa are externally financed, maintain books in foreign currency, incur heavy capital expenditure over long construction periods, and can only claim capital tax deductions upon commissioning.

Important bottom-line:

The Tribunal’s view is that foreign currency accounting may explain the commercial architecture of a project, but it does not override the statutory conversion rules under the Income Tax Act. 

The Tribunal’s view that commercial architecture (keeping books in USD) does not dictate statutory tax rules, highlights the necessity of maintaining a “shadow” asset cost-base ledger in local currency from Day 1 of construction for capital intensive projects where accounting in foreign currency is mandated as part of project financing contractual obligations.

This is because the implication of the ruling is that a capital intensive project’s tax model must now reflect local currency conversion at every expenditure point where accounting is not in local currency.

ITR World Tax 2026 Rankings: MRT Tax among Top Tax Firms in Uganda.

We are delighted to share that MRT Tax has been ranked among the Top tax firms in Uganda in the newly released ITR World Tax 2026 rankings

In addition, the firm’s Managing Partner, Mark Ruhindi, has been individually recognized as a ‘Highly Regarded’ practitioner in General Corporate Tax – (The Highest Tax Leader Rating), underscoring his standing as one of Uganda and East Africa’s leading tax professionals.

This achievement follows MRT Tax’s earlier nomination for the “Tax Firm of the Year (Uganda)” Award at the International Tax Review (ITR) EMEA Tax Awards 2025—a ceremony that celebrates the most distinguished tax and transfer pricing professionals and teams across 33 jurisdictions in Europe, the Middle East, and Africa.

These milestones hold particular significance for us, being the youngest practice to attain recognition within this elite category — in a competitive market historically dominated by global accounting networks and long-standing decades old law firms.

MRT Tax nominated for “Tax Firm of the Year – Uganda” at the ITR EMEA Tax Awards 2025.

We’re honored to share the great news that our firm is shortlisted for “Tax Firm of the Year – Uganda” at the Prestigious International Tax Review’s ITR EMEA Tax Awards 2025.

The ITR EMEA Tax Awards was established in 2005 to commend tax professionals and their practice accomplishments over a 12-month timescale.

This year’s 21st annual awards highlights the most distinguished tax and transfer pricing professionals and teams across 33 jurisdictions in the EMEA region(Europe, Middle East and Africa).

This recognition is more than just a nomination—it’s a testament to the growing influence of our firm within Uganda and East Africa’s complex and evolving tax landscape.

It reflects our team’s commitment to technical excellence, client trust, and innovation in delivering forward-thinking tax solutions to the market.

We are immensely proud of what the recognition represents to both the firm, our partners and clients.

From humble beginnings, we’ve built MRT Tax into a firm trusted by some of the country’s most dynamic businesses and we continue to be a trusted guide to investors of all categories navigating market entry into this market and beyond.

We’ve established partnerships with some of the world’s leading firms and practitioners and are on course to consolidate our position as a top-tier firm.

The nomination is also a powerful vote of confidence from both our peers and clients.
On behalf of the teams at MRT Tax and its sister and collaborating firms, We would like to thank you all for believing in us and for entrusting us with the opportunity to provide answers and solutions to your most complex and high-stakes legal and tax matters over the past year.

We would also like to congratulate our partners and colleagues who have been Shortlisted in other jurisdictions on your well-deserved recognition. Ends

Brand Marketing and Advertising Services in Cross Border Trade; Where and How does consumption Occur for VAT Purposes?

Marketing and advertising services aim to build brand goodwill, which is an intangible asset tied to specific territories. It is obvious that brand visibility and consumer engagement occur within the market targeted by the advertisements and brand marketing, in this case, Uganda.

Goodwill, in law, is territorial and can be quantified financially but this is tied down to the territory in which the reporting entity operates because again in law, goodwill only exists with the existence of trading activities in a particular market. 

This means the economic benefit sought when buying marketing services is goodwill enhancement. This economic benefit is therefore realized in the market where goodwill is enhanced as a result of the brand marketing and advertising targeting that market. In this case Uganda and most certainly not in the United States.

TAX TREATMENT OF MARKETING AND PROMOTIONS ‘FREEBEES’; LEARNING INSIGHTS FROM THE CROWN BEVERAGES CASE

In finance, a credit memo’s role is not to constitute payment for goods or services but rather to adjust accounting records to reflect a reduction in receivables. In simpler terms, a credit memo corrects or cancels a previous transaction, and as such, cannot logically be considered a form of payment for subsequent transactions

In this case, the Tribunal’s characterization of the transactions between the taxpayer and its distributor as “purchases’’ of promotional sodas and the description of the credit memo as a “form of payment” for those goods may be problematic.

The credit memo issued by Crown Beverages does not reflect a new or separate purchase. Instead, it can only be, either a reversal or adjustment of previous transactions between Crown Beverages and Lira Resort Enterprises Ltd or a promotion discount for which a promotion expense is recognised in Crown Beverages books. It can not be both.

For income tax reporting purposes, treating the credit memo as a payment method for a new separate sales transaction could lead to unintended consequences and, potentially, open up a loophole for a tax avoidance scheme.

TAX JUSTICE AND EQUITY; GOVERNMENT’S OBLIGATIONS TO TAXPAYERS.

URA ought to make reasonable accommodations for all taxpayers, recognizing that small taxpayers, in particular, may face challenges in understanding and complying with tax obligations due to limited resources and expertise. This includes providing simplified guidance, offering assistance programs, and ensuring that tax information is accessible and understandable.

Both large and small taxpayers who make genuine efforts to comply with tax laws should be treated fairly by URA. However, URA may need to exercise greater leniency and understanding towards small taxpayers who may lack the resources to fully comprehend complex tax requirements.

URA AND USED CAR IMPORTERS; WHAT ARE THE OPTIONS FOR AGGRIEVED TAXPAYERS?

I would appreciate the tax administration expediency URA finds in attaching uniform valuations to all motor vehicle imports and lends credence to my own speculation that the reason why URA has so far avoided the opening of this pandora’s box at all costs is to keep government’s cost of customs duty administration under this head low. 

It also appears the tax body foresees a drop in customs duty collection from used motor vehicle imports hence their insistence on maintaining this system even when the courts have pronounced themselves on the legality of the same. 

The little or no public debate and commentary by technical people like myself for all these years has also so far saved the tax body the headache that comes with having to deal with hundreds of objections and litigation that would have arisen from objections by motor vehicle importers of all sizes and categories against import duty assessments but I think this will no longer be the case, because the law is the law. I implore the commissioner to desist from shifting goal posts in enforcement when it does not favour the government.

GOLDSTAR INSURANCE LTD v URA; A COMPLIANCE ALARM BELL FOR THE UGANDAN INSURANCE INDUSTRY.

As a result of the decision, complications may now arise as to the accounting and tax treatment of these commissions in the books of the resident taxpayer if the entire premium is now taxed as the income of the non-resident re-insurer, bearing in mind that this is not a final tax.

The decision raises yet another headache for the insurance industry in regards to VAT on importation of services. Although not traversed as an issue as there was no dispute in this regard, the tribunal mentioned in passing that whereas a supply of re-insurance services by resident companies are VAT exempt, this wasn’t the case where a Ugandan insurance company sought to import the re-insurance service. I therefore anticipate that URA may seek to raise assessments in this regard in the future.

The Sadolin case and Judicial Review in taxation disputes. Where’s the line?

MARK RUHINDI High Court has issued an Order of Certiorari in SALIM ALIBHAI & 9 OTHERS v URA MISC CAUSE NO. 123 OF 2020, quashing the commissioner’s decision revoking the Private Ruling in respect of the sale of shares by the former shareholders of the Sadolin Ltd (now Kansai Plascon ltd) without according them aContinueContinue reading “The Sadolin case and Judicial Review in taxation disputes. Where’s the line?”