Wakilii

Shoprite Checkers (U) Limited v Uganda Revenue Authority [2025] UGTAT 10

Tribunal · 2025 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging additional tax assessments following a tax audit
Decision
VAT assessment upheld; PAYE dispute remitted for reconciliation

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tax Appeals Tribunal dismissed the applicant's challenge to a VAT assessment of UGX 1,354,624,690, finding that the applicant failed to prove the assessment was incorrect. The tribunal held that purported inter-divisional stock transfers between the applicant's divisions were not a consistent practice and that transferred items included standard-rated processed products not exempt from VAT. The tribunal remitted the PAYE dispute of UGX 58,956,901 to the parties for reconciliation, as both parties agreed the sundry costs were taxable and the dispute concerned only whether PAYE had been properly accounted for.

Outcome

VAT assessment upheld; PAYE dispute remitted for reconciliation

Facts

Following a tax audit, Uganda Revenue Authority issued additional assessments against Shoprite Checkers (U) Limited for VAT of UGX 1,354,624,690, PAYE of UGX 58,956,901, and rental tax penalty of UGX 31,277,074. The VAT assessment arose from a variance between sales declared in VAT returns and sales used to compute franchise fees paid to the franchisor for 2016 and 2017. The applicant explained the variance as an error in computing franchise fees, claiming it incorrectly included inter-divisional stock transfers between its Freshmark Division and Supermarket Division. The PAYE assessment arose from a variance between staff costs in income tax returns and salaries in PAYE returns. The applicant claimed it had properly accounted for PAYE on expatriate sundry benefits (rent, electricity, water, school fees) by including PAYE paid on employees' behalf as a taxable benefit. The rental tax penalty was resolved in mediation.

Issues

  1. Whether the Applicant is liable to pay the taxes assessed?
  2. What remedies are available to the parties?

Orders

  • The Applicant's claim in respect of the VAT assessment of Shs. 1,354,624,690 is dismissed with costs.
  • The Applicant is liable to pay the sum of Shs. 1,354,624,690.
  • The dispute in respect of PAYE in the sum of Shs. 58,956,901 is remitted to the Respondent for reconciliation between the parties.
  • The Parties are ordered to reconcile and file a Reconciliation report with the tribunal by close of business on 15 July 2025.
  • The Respondent is awarded ¾ of the costs of the Application.

Rules and key headnotes

Tax Law — VAT — Burden of Proof — Taxpayer Must Prove Assessment Incorrect
Under section 28 of the Tax Procedures Code Act, where a tax assessment has been issued, the burden is on the taxpayer to prove on a balance of probability that the assessment is incorrect.
Tax Law — VAT — Inter-Divisional Transfers — Not Exempt Without Proof of Consistent Practice
A taxpayer claiming that inter-divisional stock transfers explain a variance in declared sales must prove that such transfers were a uniform and consistent practice across all periods of operation, not merely the period under assessment. Failure to provide evidence of transfers in periods other than the assessed period undermines the claim.
Tax Law — VAT — Exempt Supplies — Unprocessed Agricultural Products
Section 19 of the VAT Act exempts the supply of unprocessed agricultural products from VAT. However, where evidence shows that inter-divisional transfers included standard-rated processed items such as prepared garlic, snack mixes, and dried fruit flakes, the transfers cannot be treated as entirely exempt from VAT.
Tax Law — Franchise Fees — Failure to Correct Errors — Adverse Inference
Where a taxpayer claims it erroneously overpaid franchise fees and withholding tax but fails to amend its income tax returns, claim a refund from the franchisor, or amend its WHT returns, the tribunal may draw an adverse inference that the original declarations were correct.
Tax Law — PAYE — Reconciliation — Remittal Where No Question of Law Arises
Where both parties agree that certain staff costs are taxable and the dispute concerns only whether PAYE has been properly accounted for, the matter is one of reconciliation rather than law and may be remitted to the parties for reconciliation.

Legislation cited (15)

Cases cited (3)

  • M-Kopa Uganda Limited v Uganda Revenue Authority (HCCA No. 007 of 2021)
  • Advocates Coalition for Development and Environment & 4 Others v Attorney General & Another (Constitutional Petition No. 14 of 2011)
  • Energo (U) Ltd v Geoffrey Rubaramira & Attorney General (CA No. 0183 of 2013)

Full judgment

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

Shoprite Checkers (U) Limited v Uganda Revenue Authority 2025 UGTAT 10 (25 June 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.