Court upholds sh1b tax assessment against Airtel Uganda

KAMPALA, Uganda — The Commercial Court has upheld a sh1.09 billion tax assessment against Airtel Uganda Ltd. regarding imported broadband processing equipment.

Justice Stephen Mubiru ruled April 22 that the Uganda Revenue Authority was justified in using an alternative valuation method after Airtel failed to provide enough documentation to explain a significant price gap.

The dispute centered on N2 unit equipment supplied by Chinese firm ZTE Corp. in October 2018. Airtel declared a price of $1,349.78 per unit, but another local telecom company declared identical goods at $10,145.23 per unit during the same period.

The tax body invoked the transaction value of identical goods method after an audit of Airtel’s warehouse. This method, known as Method 2 under international trade guidelines, resulted in the sh1.09 billion assessment.

Airtel initially challenged the move before the Tax Appeals Tribunal, arguing that customs law requires taxes to be based on the actual transaction price. The tribunal had sent the case back to the revenue authority for further investigation, a move Mubiru criticized in his ruling.

The judge said the tribunal erred by remitting the case when enough evidence already existed. He noted that allowing a remittal could unfairly give taxpayers a second chance to present evidence they failed to provide during the initial assessment.

While Mubiru found the underlying tax liability valid, he noted the taxpayer succeeded on a procedural point. He ordered each party to pay its own legal costs.

Catherine Kyokunda Donovan, the revenue authority’s commissioner for legal services and board affairs, said the ruling provides clarity on customs valuation. She said that while importers must declare transaction values, the tax body must remain objective when rejecting those figures.