Wakilii

Goal Relief Development Organisation v Uganda Revenue Authority (Application 77 of 2021)

Tribunal · [2023] UGTAT 24 · 2023 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging tax assessments for Withholding Tax, PAYE, and VAT following objection decision by Uganda Revenue Authority
Decision
Application partly allowed. Certain tax assessments upheld; others set aside. Applicant liable for substantial portion of assessed taxes.

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 applicant, an NGO with income tax exemption, remained liable as a designated withholding agent for WHT and VAT on certain transactions. The Tribunal upheld assessments for WHT on local supplies where exemption was not proven, WHT on international payments for management charges and software licenses, PAYE on tuition fees as employment benefits, and VAT on imported services. The Tribunal set aside assessments for supplies below the statutory threshold, staff allowances exempt under the Income Tax Act, and training conducted abroad. Application partly allowed.

Outcome

Application partly allowed. Certain tax assessments upheld; others set aside. Applicant liable for substantial portion of assessed taxes.

Facts

Goal Relief Development Organisation, an NGO providing social work activities in Uganda, held income tax exemption status for 2014-2015, 2016-2017, and 2018-2019. Uganda Revenue Authority conducted a compliance review for WHT, PAYE, and VAT for January 2017 to December 2019, assessing total taxes of UGX 650,077,662. The assessment comprised WHT on local supplies (UGX 52,345,885), WHT on international payments for programme delivery fees, software licenses, and head office staff training (UGX 263,533,867), VAT on international payments (UGX 316,240,641), and PAYE (UGX 18,867,131). The applicant objected, arguing its exempt status, that certain suppliers were exempt, that payments were below statutory thresholds, that allowances and reimbursements were not subject to WHT, that tuition fees were deductible training expenses, and that services from Goal Ireland were not taxable supplies. URA disallowed the objection and upheld the assessments. The applicant is a designated withholding agent under the Income Tax Act.

Issues

  1. Whether the applicant is liable to pay the taxes assessed for Withholding Tax on local supplies, international payments, and staff allowances.
  2. Whether the applicant is liable to pay PAYE on tuition fees paid for staff.
  3. Whether the applicant is liable to pay VAT on international payments and imported services.
  4. What remedies are available to the parties.

Orders

  • The applicant is liable to pay WHT of UGX 3,146,153.10 for local supplies alleged to be exempt.
  • The applicant is liable to pay WHT of UGX 2,425,896 for agricultural supplies alleged to be exempt.
  • The applicant is liable to pay WHT of UGX 9,121,675 purportedly paid on an accrual basis in 2019.
  • The applicant is liable to pay WHT of UGX 11,104,082 arising from correction journals.
  • The applicant is liable to pay WHT of UGX 1,735,842 purportedly overstated in respondent's workings.
  • The applicant is liable to pay WHT of UGX 20,324,975.26 for training and support from head office in 2019.
  • The applicant is liable to pay PAYE of UGX 18,867,131 for tuition paid for staff in higher institutions.
  • The applicant is liable to pay taxes of UGX 11,053,514 for tuition paid for staff members' children.
  • The applicant is liable to pay WHT of UGX 316,240,641 for international payments.
  • The applicant is liable to pay VAT of UGX 379,488,769 for imported services.
  • WHT of UGX 2,522,294 for supplies below UGX 1,000,000 is set aside.
  • WHT of UGX 1,158,459 on staff allowances is vacated.
  • WHT of UGX 3,591,386 for training of staff in Thailand is set aside.
  • WHT of UGX 829,471 for allowances for district project participants is set aside.
  • The applicant will pay two thirds of the costs of the application.

Rules and key headnotes

Income Tax — Withholding Tax — Exempt Organisations — Scope of Exemption
An income tax exemption granted to an NGO under section 2(bb) of the Income Tax Act does not exempt the organisation from its obligations as a designated withholding agent under sections 119 and 120 of the Act. The exemption applies only to the organisation's own income tax liability and does not extend to WHT, PAYE, or VAT.
Income Tax — Withholding Tax — Burden of Proof — Supplier Exemption
Where a withholding agent claims that suppliers are exempt from WHT under section 119(5)(f)(i) of the Income Tax Act, the agent bears the burden of proving the exemption by producing valid exemption rulings or certificates covering the relevant tax period. Failure to produce such evidence renders the withholding agent liable for the tax that should have been withheld.
Income Tax — Withholding Tax — Aggregate Payments — Threshold Application
Under section 119(1) of the Income Tax Act and the Income Tax (Designation of Payers) Notice, the one million shilling threshold for WHT applies to the total contract value where separate supplies constitute one contract. Where a taxpayer contends that separate supplies were below the threshold, the respondent must examine the underlying contracts to determine whether the aggregate exceeds the threshold. In the absence of contract evidence, WHT cannot be assessed on the basis of aggregation alone.
Income Tax — PAYE — Employment Benefits — Tuition Fees
Tuition fees paid by an employer for staff training at tertiary institutions and universities constitute an employment benefit under section 19(1)(b) and paragraphs 2 and 11 of the Fifth Schedule to the Income Tax Act. Such benefits are subject to PAYE regardless of whether the training expense qualifies as an allowable deduction under section 33 of the Act. An allowable deduction does not render the benefit exempt from PAYE unless specifically exempted by statute.
Income Tax — Withholding Tax — International Payments — Management Charges
Where a non-resident head office sources grants for a local branch and deducts a commission or fee for such services, the deduction constitutes consideration for managerial services under section 78(b) of the Income Tax Act. Such payments are management charges derived from sources in Uganda under section 79 and subject to 15% WHT under sections 83 and 120, notwithstanding that the local entity is a charitable organisation receiving grant income.
Income Tax — Withholding Tax — Royalties — Software Licenses
Where a non-resident entity purchases software licenses for use by a resident branch in Uganda, and the branch reimburses the head office for the cost, the reimbursement constitutes consideration for a royalty under sections 2(mmm) and 79(j) of the Income Tax Act. The right to use software in connection with internet and related services falls within the definition of royalty, and the resident branch is obligated to withhold 15% WHT under sections 83 and 120.
VAT — Imported Services — Branch and Head Office Transactions
Under section 4(c) and regulation 13(3) of the VAT Act, where a head office outside Uganda provides services to a branch in Uganda for consideration, the services are treated as imported services supplied by a separate overseas person. The branch is liable to account for VAT on such imported services under section 5(1)(c), including services such as grant sourcing, administrative support, and software provision, where the services are utilised or consumed in Uganda.

Legislation cited (52)

Cases cited (7)

  • Balore Transport and Logistics (Uganda) Limited v Uganda Revenue Authority (Application 35 of 2020)
  • Stanbic Bank Holdings Limited v Uganda Revenue Authority (Application 56 of 2019)
  • Uganda Revenue Authority v Cowi (HCCA 0034 of 2020)
  • Ernst and Young v Uganda Revenue Authority (Application 30 of 2020)
  • Elma Philanthropies (EA) Ltd v Uganda Revenue Authority (Application 46 of 2019)
  • Metropolitan Life Limited v Commissioner for the South African Revenue Service A 232/2007
  • Apollo Hotel Corporation v Uganda Revenue Authority (Application 68 of 2018)

Full judgment

↓ Download PDF

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

Goal Relief Development Organisation v Uganda Revenue Authority (Application 77 of 2021) 2023 UGTAT 24 (26 June 2023)
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.