Overview:
EY Uganda argued the services were not supplied inside Uganda and so fell outside the country's VAT system. The firm said the work was contracted and paid for centrally by entities elsewhere in its global network, with costs simply passed on to member firms like itself without any added charge.
KAMPALA — Uganda’s High Court has ordered EY Uganda to pay UGX 3.48 billion in value-added tax (VAT), dismissing the firm’s appeal against an assessment by the Uganda Revenue Authority (URA).
Justice Dr. Ginamia Melody Ngwatu ruled on 11 June that EY Uganda was liable for VAT on a range of services it received from companies within its own global network, as well as from two outside contractors, between January 2014 and June 2018.
The ruling upholds an earlier decision by Uganda’s Tax Appeals Tribunal and brings to an end a dispute that has run since 2022.
URA’s assessment covered services including IT support, marketing, risk management, financial advisory work, due diligence and staff training, which it said EY Uganda received from Ernst & Young Global Services Limited, Ernst & Young (EMEIA) Services Limited, and two technology providers, Face Technology and Dimension Data.
EY Uganda argued the services were not supplied inside Uganda and so fell outside the country’s VAT system. The firm said the work was contracted and paid for centrally by entities elsewhere in its global network, with costs simply passed on to member firms like itself without any added charge.
The court rejected that argument, ruling that what mattered was not where the contracts were signed or the bills first paid, but where the services were actually used. Because EY Uganda received and benefited from the work inside the country, the judge found, the firm was the “consumer” of the services and liable for VAT under Uganda’s tax law.
“In the circumstances, the appellant is the consumer of the stated services and pays consideration for the same,” Justice Ngwatu said in her ruling.
The court also dismissed EY Uganda’s argument that Uganda’s tax law contained gaps around digital and remotely delivered services that should be resolved in the taxpayer’s favour, finding that existing provisions of the VAT Act already gave URA a clear basis to collect the tax.
A separate point raised by URA — that EY Uganda had already withheld income tax on payments to its foreign affiliates, effectively acknowledging the cross-border nature of the transactions — was accepted by the court as supporting evidence, even though it agreed that VAT and income tax are legally distinct.
The court dismissed all five grounds of EY Uganda’s appeal and ordered the firm to pay URA’s legal costs.
The case is among a series of recent disputes between URA and large taxpayers over how Uganda’s VAT law applies to services delivered from outside the country.