Tag Archives: INVESTING IN UGANDA

Uganda FY 2026/27 Year on the Horizon: Tax Outlook and the Data-Driven Tax Controversy Era

The past year confirmed a trend we highlighted in our 2025 year-in-review and 2026 outlook notes: tax enforcement is becoming more data-driven, transaction-sensitive and consequential. URA’s ability to compare VAT returns, income tax returns, EFRIS data, financial statements, bank information, customs records, withholding tax records and third-party disclosures is now central to the enforcement environment.

For businesses, this means tax controversy increasingly begins long before an assessment is issued. It begins at the invoice, contract, board resolution, share register, payroll configuration, import entry, loan agreement, EFRIS record, valuation report or reconciliation schedule.

The 2026 tax amendment package reinforces that shift. The amendments widen collection points, strengthen withholding mechanisms, preserve targeted incentives, increase the VAT registration threshold, introduce or expand sector-specific taxes, and continue the move toward e-invoicing and recurring reporting.

Uganda M&A Tax Structuring: High Court Clarifies the Interplay Between Roll-over Relief and Withholding Tax Rules in URA v Tunga Nutrition

The High Court has allowed URA’s appeal and set aside the Tax Appeals Tribunal’s decision that had earlier interpreted(in the taxpayer’s favour), key Income Tax Act provisions governing roll-over relief in M&A transactions.

The decision matters for M&A because it treats tax-neutral restructuring as a legal outcome that must be supported by the transaction documents and deal-close file. 

An asset-for-share transfer may form part of a merger, joint-venture contribution, pre-completion reorganisation or group restructuring. But where the taxpayer claims section 76 roll-over relief, the record must show that the conditions set by the Income Tax Act were satisfied when the assets moved.

The immediate practical implication for Ugandan M&A transactions is that tax planning must be integrated and built into the legal completion steps. The deal file should show the assets transferred, the consideration given, the shares issued, the register-of-members position, the voting power immediately after completion, the valuation basis, the land-transfer treatment and the withholding-tax analysis.

KEY TAKEAWAYS:

1. This is an M&A completion-risk decision: The dispute arose from an asset exchange between Unga Millers Uganda Limited and Tunga Nutrition (U) Limited. For the High Court, the issue was not the commercial label attached to the transaction, but whether the statutory conditions for roll-over relief were proved.

2. Roll-over relief qualification must be proved: A taxpayer claiming section 76 roll-over relief must show, among other things, that business assets were transferred, that shares were issued as consideration, and that the transferor had at least 50% voting power in the transferee immediately after the transfer.

3. Completion corporate records: The Court placed weight on the absence of primary corporate records, including the register of members and formal share-allotment evidence. In an M&A transaction, these records are not mere administration. They may determine whether the intended tax treatment survives a URA review.

4. Transaction/deal advice that integrates legal and tax: A live M&A transaction may involve roll-over relief, land-transfer rules, stamp duty, VAT, international tax, transfer pricing, shareholder taxation, sector approvals or other deal-specific risks that cut across both legal and tax.

VAT and Income Tax Reporting Variances: Uganda Corporate Tax Controversy Insights from Ericsson AB v URA

The Tax Appeals Tribunal has recently handed down a key VAT decision in a dispute arising from URA’s examination of Ericsson AB’s tax returns for the 2013-2017 years, spanning VAT and branch profit / income-tax components. The dispute narrowed to the VAT treatment of an unreconciled turnover variance and the lawfulness of agency notices, AND brought four central questions of law before the Tribunal:

1. Turnover Variances: When may URA treat a VAT-to-income-tax turnover variance as VAT-exclusive rather than VAT-inclusive?

2. Shifting Assessment Bases: Can URA materially alter the underlying basis of an assessment during mediation without issuing a fresh tax decision?

3. Unbilled Revenue Timing: Does the mere accounting recognition of unbilled revenue prove that a statutory VAT obligation has accrued?

4. Enforcement Timelines: Can URA enforce recovery through third-party agency notices while a taxpayer’s statutory objection rights remain active?

The ruling delivers crucial controversy lessons for corporate taxpayers navigating complex audits.

The Tribunal confirmed that VAT-to-income-tax turnover variances and accounting recognition of unbilled revenue are not automatic proxies for VAT liability—URA must still establish a strict statutory trigger.

Furthermore, the decision exposes the procedural unlawfulness of enforcing agency notices during an active objection window. Read our full analysis to understand how this pivotal ruling shapes corporate tax defence and the commercial necessity of proactive reconciliation files.

Uganda’s Interest Expense Deductibility Rules and Corporate Financing Insights from Micro-Haem v URA

Uganda’s Tax Appeals Tribunal has recently handed down a key decision on interest expense cap rules under the Income Tax Act, which reinforces the practical shift introduced by the High Court in Moil Uganda Ltd v Uganda Revenue Authority: belonging to a corporate group does not, by itself, trigger the section 25(3) interest expense cap where the financing involves genuine third-party debt from outside the group structure.

Key Commentary Takeaways:

Persistent Tax Risk: Uganda’s interest-limitation rule under section 25(3) of the Income Tax Act remains a material tax-risk provision for companies operating within commonly owned corporate structures.

Limitation on Group Theory: Micro-Haem confirms that corporate group status alone cannot justify applying the section 25(3) cap where the disputed borrowing is genuine third-party debt sourced from outside the group.

A Narrow Taxpayer Victory: The taxpayer’s success was carefully confined: the assessment was set aside on the third-party debt point, while group ownership, dormancy and exemption remained live issues requiring strict evidentiary proof.

Commercial Takeaway: For corporate financing, the origin, structure and evidentiary support for debt now matter as much as the company’s ownership map.

Uganda’s FY 2026/27 Budget and Tax Amendments: Revenue Mobilisation and the Business Resilience Test.

The FY 2026/27 Budget for Uganda focuses on full monetisation and growth through enhanced domestic revenue mobilisation, digital compliance, and targeted tax amendments, while aiming for fiscal self-reliance.

The Budget emphasizes job creation, sector-specific support, and infrastructure investment. However, the implications for businesses and taxpayers include a shift towards a more digitised and compliance-heavy tax environment, with selective relief measures that may not cushion broader economic pressures.

Challenges such as increased costs for fuel, construction materials, and the contemplated higher regulatory compliance costs necessitate proactive strategies from businesses to navigate this demanding fiscal landscape and ensure resilience amid changing tax dynamics.

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 in Strategic Partnership with Tax Consulting South Africa (TCSA)—A Leading Independent South Africa Tax Firm

MRT Tax is pleased to announce a strategic collaboration partnership with Tax Consulting South Africa (TCSA), one of South Africa’s foremost independent tax firms.

TCSA has established itself as the go-to firm for sophisticated, high-stakes tax advisory across the Southern African market, offering an unmatched combination of technical depth, innovation, and regulatory insight. With a multi-disciplinary team of tax attorneys and chartered accountants, TCSA consistently sets the standard for independent tax excellence in South Africa — and increasingly, across the continent through a professional services partner network presided over by the firm’s leaders.

As regional trade and investment flows between East and Southern Africa continue to accelerate, our clients increasingly require seamless, multi-jurisdictional tax support. Through this partnership, MRT Tax brings deep East African market knowledge and advisory experience in corporate and transaction tax, while TCSA contributes its leading capabilities in South African and cross-border tax compliance, expatriate taxation, and international tax structuring.

“This partnership enhances our ability to deliver coordinated, high-quality advisory across key African jurisdictions. It’s about ensuring that our clients, wherever they operate on the continent, have access to trusted, technically sound, and independent tax advice,” remarked Mark Ruhindi, Managing Partner MRT Tax.

East Africa Trade: Uganda’s Tax Appeals Tribunal clarifies on EAC Intra-Trade VAT

The Tax Appeals Tribunal has delivered a landmark decision that strikes at the heart of URA’s aggressive enforcement and over-reach tendencies and restores the much-needed balance in the taxpayer-taxman relationship.

(TRADE WORTH ESTABLISHMENTS LTD V URA TAT APPLICATION 338 OF 2024)

In perhaps the strongest language yet from the Tribunal against the revenue body, TAT observed:

“On the whole, we find that the Respondent acted not only unlawfully but also with impunity and in total abuse of their powers and authority… Rather than doing this [refund VAT unlawfully collected], the Respondent orchestrated a phoney scheme to deny the Applicant their refund – a taxpayer, who is the very reason for the Respondent’s existence.”

Citing its earlier decision in Canaan Sites Limited v URA, TAT further emphasises the ethical and legal obligation of URA to return taxes not legally due: “Where the Respondent collects taxes that are not legally owed, it is generally expected to refund those amounts to the taxpayer… it has an ethical and legal obligation to return those funds to maintain trust in the tax system.”

Uganda Revenue Authority goes after the Digital Economy: Payments Systems and third-Party Transaction Information in Tax Administration.

Whereas the digital economy is mostly composed of digital companies and the web-based commercial marketplace, the brick-and-mortar businesses are also covered since most now take payment through digital payment systems.

What this means is that digital payment systems now permeate nearly every sector, blurring the line between the traditional and digital economy.

The internet marketplace and the digital economy are data-driven and therefore I anticipate the next stage of the government’s tech-driven tax compliance enforcement campaign to be deployment of big data analytics and artificial intelligence in building taxpayer profiles using third-party payments and financial services information to flag transactions that would otherwise have escaped the tax net.

Sectors such as E-commerce, Gaming, Financial Services (fintech), and Telecoms process hundreds of thousands and for some, even millions of daily transactions.

Unlike a few years ago when tax authorities had no means of scrutinising such an
overwhelming volume of transactions and to assess tax upon each and every one including the tiniest of transactions.

Currently, Tax Authorities are able to rely on advanced data analytics and the deployment of artificial intelligence tools to track tax on even the smallest of transactions.

Uganda VAT E-INVOICING(EFRIS) Enforcement: Compliance Insights for Landlords and Tenants.

While initially criticised as premature and fought by taxpayers especially those under the KACITA umbrella, it appears the system is here to stay and has increasingly become the backbone of Uganda’s tax administration.

For commercial property landlords, who fall within the VAT net, strict EFRIS compliance marks a significant shift and fundamentally alters governance and tax reporting obligations for entities, which in turn poses risk to investments controlled under those entities.

The reason is simple; VAT administration directly intersects with income tax and rental tax compliance in a manner many lay taxpayers do not yet appreciate. The increased VAT scrutiny through EFRIS has a direct bearing on the landlord’s other tax compliance obligations under income tax and rental tax.

Landlords and property managers must therefore consider adjusting operating models to align with URA’s strict stance, as informal practices will expose them to heavier tax risk through deduction disallowances, penalties, additional tax assessments and a heavier professional fees burden.