Wakilii

Standard Chartered Bank Ltd v Uganda Revenue Authority [2026] UGTAT 27

Tribunal · 2026 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging an Additional Withholding Tax Assessment arising from a refund audit
Decision
Application dismissed with costs; Applicant liable for the assessed withholding tax of Shs. 1,107,188,917

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that Standard Chartered Bank was liable for withholding tax on both nostro account transaction fees and maintenance fees charged by foreign correspondent banks. Transaction fees constituted management charges paid by the bank to non-resident banks for services of a managerial nature, creating income sourced in Uganda under s.84 of the Income Tax Act. Maintenance fees did not constitute interest exempt under s.83(5) but were also income from Ugandan-source services contracts. The Respondent properly applied the Uganda-UK Double Taxation Agreement, as the charges constituted technical fees under Article 13. The Additional Assessments for 2016-2019 were not time barred, as the refund audit constituted discovery of new information under s.25(2)(a) of the Tax Procedures Code Act. The application was dismissed.

Outcome

Application dismissed with costs; Applicant liable for the assessed withholding tax of Shs. 1,107,188,917

Facts

Standard Chartered Bank Ltd held nostro accounts with foreign correspondent banks to facilitate foreign currency transactions for its customers. Following a refund audit for the period 2016-2021, URA issued an Additional Withholding Tax Assessment of Shs. 1,107,188,917 for June 2016 to December 2019, alleging the bank failed to withhold tax on fees charged by correspondent banks. The fees comprised transaction fees (charged when customers made overseas transactions) and account maintenance fees (periodic charges for operating the accounts). The bank objected, arguing: transaction fees were paid directly by customers, not the bank; maintenance fees constituted exempt interest under s.83(5) of the Income Tax Act; the assessments were time barred; and URA failed to properly apply Double Taxation Agreements. URA maintained the assessment, contending the bank was the payer and the fees constituted management charges sourced in Uganda.

Issues

  1. Whether the applicant is liable to pay the taxes assessed in respect of nostro account transaction fees and maintenance fees?
  2. Whether nostro account transaction fees constitute income derived from sources in Uganda?
  3. Whether nostro account maintenance fees constitute interest exempt from income tax under s.83(5) of the Income Tax Act?
  4. Whether the Respondent failed to apply the Double Taxation Agreements between Uganda-Denmark, Uganda-South Africa and Uganda-UK to the nostro charges?
  5. Whether the Additional Assessments for the tax periods January 2016 to May 2019 are time barred?
  6. Whether the Additional tax assessed was assessed in the wrong periods and should be vacated?

Orders

  • Application dismissed.
  • Costs awarded to the Respondent.

Rules and key headnotes

Withholding Tax — Nostro Account Transaction Fees — Liability of Resident Bank
Where a resident bank holds nostro accounts with foreign correspondent banks and facilitates customer transactions through those accounts, transaction fees charged by the correspondent banks constitute management charges paid by the resident bank to the non-resident banks, creating income sourced in Uganda under s.84 of the Income Tax Act, for which the resident bank must withhold tax, notwithstanding that the bank debits its customers' accounts for the transaction amounts and fees.
Withholding Tax — Nostro Account Maintenance Fees — Interest Exemption
Periodic maintenance fees charged by foreign correspondent banks for operating nostro accounts do not constitute interest exempt from income tax under s.83(5) of the Income Tax Act merely because they are described as such by the taxpayer. To qualify as exempt interest, the taxpayer must adduce documentary evidence proving the fees were paid in respect of debentures issued outside Uganda for the purpose of raising a loan outside Uganda, and that the interest was paid outside Uganda.
Double Taxation Agreements — Technical Fees — Nostro Charges
Nostro account charges imposed by foreign correspondent banks for facilitating international payment transactions constitute payments for services of a managerial or administrative nature within the meaning of 'technical fees' under Article 13 of the Uganda-UK Double Taxation Agreement, and are properly subject to withholding tax at the rate prescribed in the Agreement where the recipient has no permanent establishment in Uganda.
Additional Assessments — Time Limitation — Discovery of New Information
An audit finding that reveals a taxpayer filed inaccurate self-assessment returns based on a mistaken view of the law constitutes 'discovery of new information' within the meaning of s.25(2)(a) of the Tax Procedures Code Act, permitting the Commissioner General to issue Additional Assessments beyond the three-year statutory limitation period, where prior to the audit the Commissioner was satisfied the returns were accurate.
Withholding Tax — Payer Identification — Nostro Account Transactions
For the purposes of determining withholding tax liability under s.137 of the Income Tax Act, the person making payment to a non-resident is the party that controls the amount debited from the customer's account and the amount remitted to the nostro account to discharge the obligation to the foreign correspondent bank, not the customer whose account is debited, even where the customer ultimately bears the economic cost of the transaction.
Tax Assessments — Defects and Omissions — Validity
The validity of a tax assessment is not affected by reason of any mistake, defect, omission or commission in it, pursuant to s.86 of the Tax Procedures Code Act, and such defects do not render the assessment void or voidable where the substantive liability has been properly established.

Legislation cited (13)

Cases cited (16)

  • Multi-Choice (U) Ltd v Uganda Revenue Authority (TAT Application No. 1 of 2000)
  • Diamond Trust Bank Kenya Ltd v Commissioner of Domestic Taxes (Tax Appeals Tribunal Appeal No. 54 of 2016)
  • Income Tax Officer (Int) v. The Hong Kong & Shanghai Banking Corporation Ltd, ITA No. 2191/MUM/2022
  • Oman International Bank SAOG v. Dy. Director of Income Tax (International Taxation) ITA No. 680/Mum/2010
  • McKinsey & Company Inc. Africa Propriety Ltd v Commissioner of Legal Services and Board Coordination (Appeal No. 199 of 2020)
  • Translink Uganda Ltd v Uganda Revenue Authority (TAT No. 107 of 2023)
  • Kampala Hospitality Development Limited v Uganda Revenue Authority (TAT No. 69 of 2023)
  • Intertek Testing Services International Ltd v Uganda Revenue Authority (HC Civil Appeal No. 5 of 2002)
  • Esri Eastern Africa Ltd v Uganda Revenue Authority (TAT No. 41 of 2023)
  • Standard Chartered Bank Zimbabwe Ltd v. Zimbabwe Revenue Authority (Judgment No. 23/18 Civil Appeal No. SC 145/15)
  • Uniworks Transporters & Logistics Limited v Uganda Revenue Authority (TAT Application No. 62 of 2018)
  • UETCL Co. Ltd v Uganda Revenue Authority (HCCS No. 123 of 2010)
  • Goal Relief Development Organization v Uganda Revenue Authority (TAT No. 77 of 2021)
  • Kenya Commercial Bank Ltd vs. Kenya Revenue Authority (2016) KECA 220 (KLR)
  • Steel Corporation of East Africa Ltd v Uganda Revenue Authority (Civil Appeal No. 0 of 2010)
  • ABSA Bank Uganda Ltd v Uganda Revenue Authority (TAT No. 57 of 2020)

Full judgment

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Standard Chartered Bank Ltd v Uganda Revenue Authority 2026 UGTAT 27 (15 March 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.