Wakilii

Bujagali Energy Limited v Uganda Revenue Authority [2026] UGTAT 13

Tribunal · 2026 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging Administrative Additional Income and Withholding Tax Assessments following comprehensive tax audit
Decision
Application dismissed and revised assessment upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The Tax Appeals Tribunal dismissed the application and upheld the revised assessment of Shs.155,618,956,094. The Tribunal held that the assessments were not time-barred as they fell within the exception for discovery of new information under s.25(2)(a) of the Tax Procedures Code Act. On the substantive issue, the Tribunal held that under s.56(2) of the Income Tax Act, foreign currency expenditure must be converted to Uganda Shillings at the exchange rate prevailing on the date the expenditure was incurred, not when the asset was commissioned or capital allowances claimed. The Tribunal further held that the costs reclassified by URA from start-up costs to land and buildings were correctly reclassified as they did not fall within the definition of start-up costs under s.29 of the Income Tax Act.

Outcome

Application dismissed and revised assessment upheld

Facts

Bujagali Energy Limited was incorporated in 2005 to develop the Bujagali Hydro Electric power project. Construction commenced in 2007 and was completed in August 2012. Throughout construction, costs were recorded in USD with URA approval. In 2012, when the dam became operational, the Applicant converted the total accumulated USD cost to UGX using the 2012 average Bank of Uganda mid-exchange rate of Shs.2,501 for capital allowance purposes. Following a Parliamentary recommendation, URA conducted a comprehensive audit covering 2008-2022 and issued Additional Assessments totaling Shs.159,914,348,868 on 4 August 2023. URA contended that the Applicant should have converted each asset's cost using the exchange rate prevailing when that specific expenditure was incurred between 2005-2012, not the 2012 rate. The Applicant objected, arguing that s.56(2) of the Income Tax Act permitted conversion at the date amounts are taken into account for tax purposes, which was 2012 when the assets were commissioned and capital allowances first claimed.

Issues

  1. Whether the Additional Assessments are valid and not time-barred under s.25(2) of the Tax Procedures Code Act?
  2. Whether the Applicant correctly applied s.56(2) of the Income Tax Act in converting foreign currency amounts to Uganda Shillings for capital allowance purposes?
  3. Whether the Applicant correctly classified certain costs as start-up costs under s.29 of the Income Tax Act?
  4. Whether the Applicant is liable for withholding tax on foreign services rendered outside Uganda prior to 1 July 2015?
  5. Whether the Applicant is liable for withholding tax on payments to suppliers without valid TINs?
  6. Whether the Applicant is liable for the taxes assessed?

Orders

  • Application dismissed with costs.
  • Revised assessment of Shs.155,618,956,094 comprising WHT of Shs.298,382,432 and income tax of Shs.155,320,573,662 upheld.

Rules and key headnotes

Tax Law — Additional Assessments — Limitation Period — Discovery of New Information
Under s.25(2)(a) of the Tax Procedures Code Act, the Commissioner General may make additional assessments at any time if new information has been discovered in relation to the tax payable by the taxpayer. Information obtained during an audit that reveals a taxpayer has misconstrued statutory provisions and filed inaccurate returns constitutes discovery of new information, even if the underlying facts were previously available, where the tax authority was satisfied with the returns until the audit revealed the misapplication of law.
Tax Law — Foreign Currency Conversion — Timing of Conversion — Interpretation of 'Otherwise Taken Into Account'
Under s.56(2) of the Income Tax Act, where an amount taken into account is expenditure in foreign currency, it must be converted to Uganda Shillings at the Bank of Uganda mid-exchange rate applying on the date the expenditure was incurred. The phrase 'otherwise taken into account for tax purposes' applies only to financial items that constitute neither income nor expenditure. For expenditure on asset acquisition, economic performance occurs when services or property are provided under s.40(6), and conversion must occur at the exchange rate prevailing on those dates, not when the asset is commissioned or capital allowances are first claimed.
Statutory Interpretation — Technical Terms — Accrual Accounting — 'Derived' and 'Incurred'
In accrual-based tax accounting under s.40(1) of the Income Tax Act, the terms 'derived' and 'incurred' as used in s.56(2) refer to income and expenditure respectively. A taxpayer derives income when it is receivable and incurs expenditure when it is payable. Expenditure is incurred when all events determining liability have occurred, the amount can be determined with reasonable accuracy, and economic performance has occurred under s.40(4).
Tax Law — Start-Up Costs — Classification — Pre-Construction Costs Distinguished
Start-up costs under s.29 of the Income Tax Act are costs essential for setting up the legal, financial and operational infrastructure of a business, such as accountant fees, registration charges, legal fees, promotional costs and employee training. Costs incurred after a business has been set up, such as construction labourers' site camp setup, switchyard site preparation, project site clearing, access roads, feasibility studies, community development programs and compensation for crops, are pre-construction costs not start-up costs and must be classified as land or buildings as appropriate.
Statutory Interpretation — Noscitur a Sociis — General Words Following Specific Words
Under the canon of statutory interpretation noscitur a sociis, when general words such as 'such as' precede specific words in a statute, the general words cannot be read in isolation but must derive their colour and content from their context. Items falling under the general words must be similar in context to the specific items enumerated in the provision.
Tax Law — Foreign Exchange Losses — Timing — Depreciation Allowances Distinguished
Foreign exchange losses arise due to the length of time between when invoices are raised and when they are paid, not due to the length of time between when expenditure is incurred and when a claim for depreciation allowance is made. Where invoices are issued and paid in the year expenditure is incurred, any foreign exchange losses arising must be utilized in that year and cannot be claimed in a later year when capital allowances are first computed.
Tax Law — Burden of Proof — Deductibility of Expenses — Documentary Evidence
Under s.28 of the Tax Procedures Code Act and s.19 of the Tax Appeals Tribunal Act, the burden of proving that an assessment is excessive or erroneous lies on the taxpayer. Where a taxpayer claims expenses as business-related deductions, particularly large sums paid to shareholders for services allegedly provided at nil cost, the taxpayer must adduce credible and verifiable documentary evidence such as written agreements to discharge this burden. Oral testimony alone is insufficient in the absence of supporting documentation.

Legislation cited (10)

Cases cited (19)

  • Kampala Hospitality Development Ltd v Uganda Revenue Authority (TAT No. 63 of 2023)
  • Century Bottling Co. Ltd v Uganda Revenue Authority (TAT No. 096 of 2022)
  • Steel Corporation of East Africa v Uganda Revenue Authority (HCT-00-CC-CA-0 of 2010)
  • Uganda Electricity Transmission Company Ltd v Commissioner General Uganda Revenue Authority (Civil Suit No. 423 of 2010)
  • Heritage Oil and Gas Limited v Uganda Revenue Authority (Consolidated Civil Appeal No. 23 of 2011 and Civil Appeal No. 3 of 2012)
  • UMEME Limited & Another v Uganda Revenue Authority (TAT No. 40 of 2018)
  • Stanbic Bank & Others v Uganda Revenue Authority (HCCA No. 170 of 2007)
  • Okello Okello v Commissioner General Uganda Revenue Authority (HCCS No. 229 of 2010)
  • Bentleys, Stokes & Lowless v Beason (Inspector of Taxes) (1952) 2 AllER 82
  • Crane Bank Ltd v Commissioner General Uganda Revenue Authority (HCCS No. 106 of 2009)
  • Langham v Veltema (2004) STC 544
  • Michael Ndichu v Commissioner, Domestic Taxes (2023)
  • Bentley v Pike (1981) STC 360 (UK)
  • CSARS v Bosch 2015 (2) SA 174 (CC)
  • Commercial Structures Ltd v. Briggs 30 TC 477
  • IRC v Mackinlay's Trustees 22 TC 305
  • Cenlon Finance Co. Ltd vs. Ellwood (Inspector of Taxes) (1962) AC 782
  • King vs. Bloomsbury Tax Commissioners (1915) 3 KB 762
  • Maharashtra University of Health Sciences & Others v. Satchikitsa Prasarak Mandal & Others (2010) 3 SCO 786

Full judgment

↓ Download PDF

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

Bujagali Energy Limited v Uganda Revenue Authority 2026 UGTAT 13 (30 April 2026)
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.