Wakilii

Kampala Club v Uganda Revenue Authority (Civil Appeal No. 115 of 2023)

High Court · [2025] UGCOMMC 337 · 2025 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from Tax Appeals Tribunal decision upholding VAT assessment
Decision
VAT assessment quashed; appellant not liable for VAT on membership fees

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that annual subscription and membership fees paid to a non-profit club limited by guarantee do not constitute taxable supplies under the Value Added Tax Act. The court found that the club's activities were recreational and leisure-based under section 18(3) of the VAT Act, not business activities conducted for profit. The fees were paid to obtain membership status and rights, not as direct consideration for services rendered. The appeal was allowed and the VAT assessment of UGX 166,541,103 was quashed.

Outcome

VAT assessment quashed; appellant not liable for VAT on membership fees

Facts

Kampala Club, a non-profit company limited by guarantee operating health club facilities for members since 1912, was assessed by Uganda Revenue Authority for VAT on annual subscription and membership fees for 2020-2021 totalling UGX 166,541,103. The club objected, and URA partially revised the assessment but maintained the liability. The club appealed to the Tax Appeals Tribunal, which ruled in favour of URA on 31 October 2023, finding the fees constituted taxable supplies. The club then appealed to the High Court, arguing that membership fees paid solely to obtain membership status for access to recreational facilities do not constitute consideration for taxable business activities under the VAT Act, particularly given its non-profit status and the leisure nature of services provided exclusively to members.

Issues

  1. Whether annual membership and subscription fees paid by members of a non-profit club constitute a taxable supply under the Value Added Tax Act Cap 349.
  2. Whether the Tax Appeals Tribunal properly evaluated the evidence in finding the appellant liable to pay the assessed VAT.

Orders

  • Appeal allowed.
  • Decision of the Tax Appeals Tribunal dated 31st October 2023 set aside.
  • VAT assessment on membership and subscription fees for the years 2020 to 2022 quashed.

Rules and key headnotes

Value Added Tax — Taxable Supply — Membership Fees of Non-Profit Clubs
Annual subscription and membership fees paid to a non-profit club limited by guarantee for access to recreational facilities do not constitute a taxable supply under section 18(1) of the Value Added Tax Act where the club does not operate for profit and the fees are paid to obtain membership status rather than as direct consideration for services rendered.
Value Added Tax — Business Activities — Exclusion of Leisure and Recreation
Under section 18(3) of the Value Added Tax Act, business activities do not include activities carried on only as part of hobby or leisure activities. Recreational and social services provided by a non-profit members' club constitute leisure activities excluded from the definition of business activities for VAT purposes.
Value Added Tax — Consideration — Quid Pro Quo Requirement
For a payment to constitute consideration for a taxable supply under the VAT Act, there must be a direct quid pro quo between the payment and the service rendered. Membership fees paid to secure membership status and attendant rights, rather than as payment for specific services, do not satisfy the consideration requirement.
Tax Statutes — Interpretation — Non-Profit Entities
The mere fact that an entity charges fees to maintain facilities does not ipso facto transform those fees into consideration for commercial supplies. It must be shown that the transaction fundamentally constitutes a business activity conducted for profit, not merely a collective or non-commercial cost-sharing arrangement.

Legislation cited (7)

Cases cited (7)

  • Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
  • Customs and Excise Commissioners v Lord Fisher [1981] STC 238
  • Rwaheru Akiiki & Others v Uganda Revenue Authority (Civil Suit No. 117 of 2013)
  • Commissioner for Domestic Taxes v Sigona Golf Club & 4 Others (Income Tax Appeal No. E043 of 2020)
  • Apple and Pear Development Council v Customs and Excise Commissioner [1988] ECR 1443
  • Metropolitan Life Ltd v. Commissioner for South Africa Revenue Service
  • Civil Appeal No. 0098 of 2015

Full judgment

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Kampala Club v Uganda Revenue Authority (Civil Appeal No. 115 of 2023) [2025] UGCommC 337 (9 September 2025)
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.