Wakilii

Allied Beverages Company Limited v Uganda Revenue Authority [2022] UGTAT 33

Tribunal · 2022 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated applications challenging VAT assessments on services provided to a foreign company, following partial consent settlement order
Decision
Application dismissed; applicant liable for assessed VAT

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that marketing and promotional services physically performed in Uganda by a Ugandan company for a foreign client do not qualify as exported services under the VAT Act. Under section 16(2) of the VAT Act, a supply of services takes place in Uganda if the recipient is not a taxable person and the services are physically performed in Uganda. The applicant failed to show that the services were used or consumed outside Uganda as required by the Third Schedule paragraph 2(b) and Regulation 12 of the VAT Regulations. The application was dismissed and the applicant ordered to pay VAT of Shs. 17,400,459,133.

Outcome

Application dismissed; applicant liable for assessed VAT

Facts

Allied Beverages Company Limited, a Ugandan company, entered into a service agreement with Coca-Cola Export Corporation (USA) to provide marketing, promotional, and research services. The services included working with third-party marketing providers, making recommendations on marketing expenditures, gathering market information, and advising on quality control. Uganda Revenue Authority assessed VAT of Shs. 17,400,459,133 for the period August 2016 to November 2020, contending the services were locally consumed. The applicant objected, arguing the services were exported and should be zero-rated. A partial consent settlement was reached on other matters, but the export classification issue was referred to the Tribunal. Evidence showed the applicant physically performed advertising and promotional activities in Uganda through local media (Capital FM) and third-party providers.

Issues

  1. Whether services provided by the applicant to the Coca-Cola Export Corporation located in the United States of America constitute exports under the Value Added Tax Act.
  2. Whether the applicant is liable to pay the VAT assessed on those services.
  3. What remedies are available to the parties.

Orders

  • Application dismissed with costs.
  • Applicant ordered to pay VAT of Shs. 17,400,459,133.

Rules and key headnotes

Value Added Tax — Export of Services — Physical Performance Test
Under section 16(2) of the VAT Act, a supply of services takes place in Uganda if the recipient is not a taxable person and the services are physically performed in Uganda by a person who is in Uganda at the time of supply.
Value Added Tax — Export of Services — Documentary Evidence Requirements
For services to qualify as zero-rated exports under the Third Schedule paragraph 2(b) and Regulation 12 of the VAT Regulations, the taxpayer must provide documentary evidence, including a contract with a foreign purchaser that clearly specifies the place of use or consumption of the service to be outside Uganda.
Value Added Tax — Nature of VAT — Tax on Value Addition
VAT is a tax on added value imposed on each step along the chain of manufacture and distribution of goods or services supplied in the country in the course of business, calculated on the value at the time of each step, and is a tax on value addition to transactions rather than on consumption.
International Guidelines — OECD Guidelines — Applicability in Uganda
OECD VAT guidelines do not apply in Uganda unless Uganda is a party to the OECD arrangement or has made provision for the guidelines to apply in domestic law. Under section 76 of the VAT Act, international agreements prevail over the Act only to the extent Uganda is a party to such agreements.
Value Added Tax — Foreign Precedents — Applicability
Kenyan VAT decisions based on a statutory definition of 'service exported out of Kenya' as a service provided for use or consumption outside Kenya, whether performed inside or outside Kenya, cannot be applied in Uganda where Ugandan VAT law contains no similar definition and is not in pari materia with Kenyan law.

Legislation cited (9)

Cases cited (8)

  • LG Electronics Africa Logistics FZE Branch v The Commissioner Domestic Taxes (Tax Appeal No. 359 of 2018)
  • Coca-Cola Central East and West Africa Limited v The Commissioner Domestic Taxes (Income Tax Appeal No. 19 of 2013)
  • Elma Philanthropies v Uganda Revenue Authority (Application No. 46 of 2019)
  • Aviation Hangar Services Ltd v Uganda Revenue Authority (Application No. 21 of 2019)
  • Master Currency (PTY) Ltd v Commissioner for the South African Revenue Services (2013) 3 ALL SA 135 (SCA) para 17
  • Golden Leaves Hotels and Resorts Limited and Apollo Hotel Corporation v Uganda Revenue Authority (Civil Appeal No. 64 of 2008)
  • Metcash Trading Limited v The Commissioner for the South African Revenue Service CCT 3 of 2000
  • Commissioner of Domestic Taxes v Total Touch Cargo Holland (Income Tax Appeal No. 17 of 2013)

Full judgment

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

Allied Beverages Company Limited v Uganda Revenue Authority 2022 UGTAT 33 (31 August 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.