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Airtel Ug Limited v Uganda Revenue Authority (Application No TAT 10 of 2019)

Tribunal · [2022] UGTAT 16 · 2022 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging income tax, Value Added Tax (VAT) and Withholding Tax (WHT) additional assessments issued by Uganda Revenue Authority following an audit for the period June 2007 to June 2017
Decision
Application partly allowed — applicant liable for VAT of UGX 643,114,709, entitled to input VAT credit of UGX 124,971,481, not liable for WHT of UGX 208,817,971, and not entitled to input VAT credit of UGX 1,288,219,863

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that Airtel Uganda Limited was liable to pay VAT of UGX 643,114,709 on interconnect invoices due to discrepancies in invoice numbers and dates that were not rectified within the statutory period. The Tribunal disallowed input VAT credit of UGX 1,288,219,863 for lack of proof of payment and inability to authenticate supplier declarations, but allowed UGX 124,971,481 based on URA's admission. The Tribunal ruled that Airtel was not liable for WHT of UGX 208,817,971 on international roaming services, holding that the International Telecommunications Regulations (Melbourne 1988) constituted an international agreement under the Income Tax Act that prevailed over domestic tax provisions and restricted taxation to services provided to subscribers in Uganda.

Outcome

Application partly allowed — applicant liable for VAT of UGX 643,114,709, entitled to input VAT credit of UGX 124,971,481, not liable for WHT of UGX 208,817,971, and not entitled to input VAT credit of UGX 1,288,219,863

Facts

Airtel Uganda Limited acquired 100% of Warid Telecom Limited effective 1 February 2014. In 2018, Uganda Revenue Authority conducted an audit for the period June 2007 to June 2017. URA disallowed input tax credit of UGX 1,288,219,863 and issued VAT of UGX 643,114,709 on interconnect invoices. The VAT assessment arose from discrepancies between two sets of invoices issued to MTN Uganda Limited: one set dated 26 March 2014 with invoice numbers WTU/MTN/077 and WTU/MTN/078, and another set dated 24 April 2014 with invoice numbers 13202 and 13203, both reflecting identical amounts but different dates and serial numbers. URA also adjusted the WHT rate on roaming services from 5% to 15% and issued an additional WHT assessment of UGX 208,817,971. Airtel claimed the invoice discrepancies resulted from clerical error during the acquisition and system integration process. URA's efforts to verify input VAT claims with suppliers were unsuccessful, with some suppliers not confirming the output tax and others not being traceable. Airtel argued that international roaming services were not subject to WHT under the International Telecommunications Regulations (Melbourne 1988 and Dubai 2012), to which Uganda is a signatory.

Issues

  1. Whether the assessments are time barred?
  2. Whether the applicant is liable to pay VAT as assessed?
  3. Whether the applicant is entitled to input VAT credit as claimed?
  4. Whether the applicant is liable to pay the WHT assessed?
  5. What remedies are available to the parties?

Orders

  • The applicant is liable to pay the assessed VAT of Shs. 643,114,709 on the interconnect invoices.
  • The applicant is entitled to input VAT of Shs. 124,971,481.
  • The applicant is not entitled to Shs. 1,288,219,863 being input tax credit.
  • The applicant is not liable to pay WHT of Shs. 208,817,971.
  • The applicant will pay half the costs of the application to the respondent.

Rules and key headnotes

VAT — Time Limits for Additional Assessments — Applicability of Tax Procedure Code Act vs VAT Act
Where a taxpayer made self-assessments before the Tax Procedure Code Act came into force on 1 July 2016, the time limits for additional assessments are governed by the VAT Act as it stood at the time of the self-assessment, not by the Tax Procedure Code Act.
VAT — Additional Assessments — Time Limits under VAT Act Section 32
Under Section 32(2)(b) of the VAT Act as of 2014, an additional assessment must be made within five years after the date on which the return was lodged or ought to have been lodged, unless fraud or gross or wilful neglect has been committed, in which case an assessment may be made at any time.
VAT — Tax Invoices — Discrepancies in Invoice Numbers and Dates — Duty to Cancel Erroneous Invoices
Where a taxpayer issues two sets of invoices with identical amounts but different invoice numbers and dates, and claims they relate to the same supply, the taxpayer must cancel one set using credit notes under Sections 22 and 30 of the VAT Act. In the absence of credit notes, the Tribunal cannot determine which invoices were issued in error or which supplies were cancelled, and the taxpayer remains liable for VAT on the invoices not declared in returns.
VAT — Input Tax Credit — Burden of Proof — Requirement for Proof of Payment
A taxpayer claiming input VAT credit must present both valid tax invoices and proof of payment to the suppliers. Where invoices contain discrepancies, suppliers cannot be traced or do not confirm receipt of payment, and no proof of payment is provided, the taxpayer has not discharged the burden of proving entitlement to input tax credit, and the claim must be disallowed.
VAT — Input Tax Credit — Duty of Tax Authority to Collect from Suppliers
While it is the duty of the tax authority to collect output VAT from suppliers and not the taxpayer's duty to ensure suppliers remit VAT, the tax authority cannot be required to pay input VAT to a taxpayer where there is no evidence of payment to suppliers, suppliers deny receiving payment, or the information provided contains contradictions that prevent verification.
Withholding Tax — International Telecommunications Regulations — Status as International Agreement
The International Telecommunications Regulations (Melbourne 1988) constitute an international agreement within the meaning of Section 88(6)(b) of the Income Tax Act as a multilateral agreement providing administrative assistance in tax matters. Under Section 88(2), the terms of such international agreements prevail over the provisions of the Income Tax Act.
Withholding Tax — International Roaming Services — Restriction of Taxation to Domestic Subscribers
Article 6.1.3 of the International Telecommunications Regulations restricts the collection of fiscal taxes on international telecommunication services to customers or final consumers billed in that country. Where roaming services are provided to persons not in Uganda or to foreign users roaming in Uganda who are not subscribers, withholding tax under Section 86(4) of the Income Tax Act does not apply.

Legislation cited (26)

Cases cited (12)

  • Cable Corporation v Commissioner General Uganda Revenue Authority
  • Target Well Uganda Ltd v Uganda Revenue Authority (HCCS No. 751 of 2015)
  • East African Investment Property v Uganda Revenue Authority (Application No. 6 of 2019)
  • Enviroserv (U) Ltd v Uganda Revenue Authority (Application No. 24 of 2017)
  • Civil Appeal No. 08 of 1999
  • Uganda Electricity Transmission Company Ltd v Commissioner General, Uganda Revenue Authority (HCCS No. 423 of 2010)
  • Red Concept Ltd v Uganda Revenue Authority (Application No. 36 of 2018)
  • Margaret Rwaheru Akiiki & 13945 others v Uganda Revenue Authority (Civil Suit No. 117 of 2013)
  • Rubya Investors Ltd v Uganda Revenue Authority (Application No. 105 of 2020)
  • Lomas v Peek (1947) 2 All ER 574
  • R v Senior (1899) 1 QB 283
  • HCCS 25 of 2014

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Airtel Ug Limited v Uganda Revenue Authority (Application No TAT 10 of 2019) 2022 UGTAT 16 (28 November 2022)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.