Wakilii

Ericsson AB v Uganda Revenue Authority [2026] UGTAT 24

Tribunal · 2026 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging additional income tax and VAT assessments following returns examination
Decision
Application granted; assessment set aside and substituted with reduced liability; refund ordered with interest

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 Tribunal held that the unreconciled variance between VAT and income tax sales must be treated as VAT-inclusive under section 21(3) of the VAT Act, reducing the principal VAT liability to Shs. 2,580,634,340. Interest on this liability was capped at the principal amount and subsequently waived under section 46 of the Tax Procedure Code Act. The Tribunal found that the Respondent acted unlawfully in issuing third-party agency notices during the statutory 45-day objection period, and ordered a refund of excess amounts collected with interest at 2% per month.

Outcome

Application granted; assessment set aside and substituted with reduced liability; refund ordered with interest

Facts

Ericsson AB, a Ugandan branch of a Swedish company providing telecommunications services, was assessed additional income tax and VAT totaling Shs. 10,288,140,569 following a returns examination for 2013-2017. The assessment arose from variances between VAT and income tax sales declarations, alleged under-declaration of branch profit repatriation tax, and timing differences in revenue recognition. The Respondent issued third-party agency notices to the Applicant's bankers on 20 June 2019, within the 45-day objection period, and collected the full assessed amount. The Applicant objected, arguing that variances arose from differences in revenue recognition criteria between VAT (time of supply) and income tax (percentage of completion method), and that the agency notice was premature. Following mediation, the parties reconciled some amounts but disagreed on the VAT treatment of the remaining variance and the lawfulness of the agency notice.

Issues

  1. Whether the VAT liability of Shs. 3,857,226,802 from the unreconciled variance of Shs. 21,429,037,787 is due and payable.
  2. Whether the Respondent's interest amounts to Shs. 6,024,009,782 is due and payable.
  3. Whether the Respondent acted unlawfully in issuing a Third-Party Agency Notice against the Applicant.
  4. Whether the Respondent erred in imposing additional branch profit repatriation tax of Shs. 569,540,049.
  5. What remedies are available to the parties?

Orders

  • The Respondent's objection decision assessing Shs. 10,288,140,569 is set aside.
  • The Applicant's revised liability is principal VAT of Shs. 2,580,634,340.
  • Interest on the VAT liability is capped at Shs. 2,580,634,340.
  • Interest of Shs. 2,580,634,340 arising from VAT liability and Shs. 465,900,526 arising from CIT liability is waived.
  • Interest of Shs. 694,964,719 arising from unbilled revenue is set aside.
  • The Respondent's execution of the agency notice during objection proceedings was unlawful.
  • The Respondent shall offset the liability of Shs. 2,580,634,340 from the amount collected and refund the balance of Shs. 7,707,506,228 plus the 30% deposit.
  • The refund shall be made with interest at 2% per month from the date of collection until payment.
  • Costs of the application are awarded to the Applicant.

Rules and key headnotes

Value Added Tax — Treatment of Unreconciled Variance — VAT-Inclusive vs VAT-Exclusive Formula
Where a variance arises between sales declared in income tax returns and VAT returns, and no invoices exist to support the variance, the variance must be treated as VAT-inclusive under section 21(3) of the VAT Act, which provides that where a taxable supply is made without a separate amount of consideration being identified as payment of tax, the taxable value is the total amount excluding tax.
Tax Administration — Functus Officio — Variation of Objection Decision at Mediation
Once the Uganda Revenue Authority issues an objection decision and the taxpayer files an application before the Tax Appeals Tribunal, the Authority becomes functus officio and is precluded from varying its objection decision during mediation without issuing a fresh assessment. The Tribunal's jurisdiction under section 14 of the Tax Appeals Tribunal Act extends only to reviewing decisions made under a taxing Act, not positions taken during mediation.
Tax Administration — Agency Notices — Issuance During Objection Period
The issuance of a third-party agency notice during the statutory 45-day objection period provided under section 26(1) of the Tax Procedure Code Act is unlawful and deprives the taxpayer of the right to object to the assessment. The existence of a payment due date in the assessment notice does not override or suspend the taxpayer's statutory right to object.
Value Added Tax — Interest — Capping Under Section 40 of VAT Act
Under section 40 of the Value Added Tax Act, interest due and payable on unpaid tax shall not exceed the aggregate of the principal and penal tax. Where the principal tax is reduced following reconciliation or tribunal determination, the interest must be recalculated and capped accordingly.
Tax Administration — Interest Waiver — Section 46 of Tax Procedure Code Act
Section 46 of the Tax Procedure Code Act waives any interest and penalty outstanding as at 30 June 2020. Where the revenue authority unlawfully collects interest before that date based on an inflated assessment, and the assessment is subsequently reduced, the interest relating to periods before 30 June 2020 remains subject to the waiver. The unlawful collection does not artificially extinguish the taxpayer's entitlement to the waiver.
Value Added Tax — Time of Supply — Unbilled Revenue
VAT on unbilled revenue arises not from the act of invoicing but from the occurrence of a taxable supply under section 14 of the VAT Act. The accrual of revenue in financial statements under accounting standards does not automatically establish completion of performance for VAT purposes. The evidential burden rests on the revenue authority to demonstrate that services were completed, payment received, or tax invoices issued to trigger the time of supply.
Tax Administration — Refund of Illegally Collected Tax — Interest on Refund
Where tax is illegally collected through an unlawful agency notice, the revenue authority must refund the excess with interest. The refund of illegally collected tax is not an act of administrative grace or discretionary waiver but a debt of justice. In a system governed by the rule of law, the state must lead by example in its respect for property rights.

Legislation cited (22)

Cases cited (11)

  • Kansai Plascon v Uganda Revenue Authority (Application No. 64 of 2020)
  • Housing Finance Bank Ltd v Commissioner General, URA (HCCS No. 259 of 2014)
  • Uganda Revenue Authority v Tamale & Co. Advocates (Civil Appeal No. 11 of 2020)
  • Uganda Revenue Authority v Rwenzori Bottling Company Limited (HCCA 10 of 2023)
  • MacMillan Bloedel Ltd vs. Minister of Finance (1985), 60 BCLR 145
  • MTN Uganda Limited v Uganda Revenue Authority (Misc App No. 05 & 06 of 2026)
  • Iliso Consulting (Pty) Limited v Uganda Revenue Authority (TAT No. 244 of 2022)
  • Babibaasa Frank v Commissioner General, URA (HCCS No. 434 of 2011)
  • Nile Breweries v Uganda Revenue Authority (Misc App No. 12 of 2026)
  • Uganda Revenue Authority v Pentecostal Assemblies of God (Civil Appeal No. 0117 of 2025)
  • UVAV v Uganda Revenue Authority (App No. 264 of 2024)

Full judgment

↓ Download PDF

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

Ericsson AB v Uganda Revenue Authority 2026 UGTAT 24 (29 May 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.