Stanbic challenges UGX117.8 billion tax assessment as global rules shift

KAMPALA, Uganda — Stanbic Bank Uganda and its holding company, Stanbic Uganda Holdings Ltd., are contesting a 117.8 billion Ugandan shilling tax assessment before the Tax Appeals Tribunal, a high-stakes challenge that comes just as international rules governing corporate taxation are undergoing a major rewrite.

The case, filed by Kampala Associated Advocates in June 2025, centers on a franchise fee charged by Stanbic’s South African parent, Standard Bank Group, to its Ugandan subsidiary. It stands as Uganda’s largest live transfer-pricing dispute.

While the Uganda Revenue Authority does not dispute that the parent company provides oversight, brand guidance and group support, the tax authority questions whether the amounts billed were proportionate to the value the Ugandan business actually received. The authority also questions whether some of the charges amounted to costs the parent should have absorbed itself or had already recovered elsewhere in the group.

According to reports by CEO East Africa, the revenue authority’s findings extend to Stanbic’s Global Markets trading business and a series of technology projects, with officials arguing that costs may have been duplicated or misallocated across jurisdictions.

Stanbic maintains that the arrangements reflect legitimate cost-sharing within a multinational banking group and denies any wrongdoing.

The legal battle represents a local branch of a broader international argument the Organization for Economic Cooperation and Development has been trying to resolve for years: how much proof a multinational corporation needs before it can charge a subsidiary for support services rendered by a head office.

The clash is unfolding at a highly unusual time for international tax policy. On June 1, 2026, the OECD opened a public consultation on revisions to Chapter VII of its Transfer Pricing Guidelines, which deals specifically with intra-group services. Public comments are due by July 22, with a follow-up discussion scheduled for November at the OECD Conference Centre in Paris.

The OECD described the draft as an effort to update and modernize the existing text and align it more closely with the foundational chapters of the guidelines, rather than a rewrite of underlying principles. The draft introduces 21 new illustrative examples while leaving the simplified treatment of low-value-adding services largely intact.

The proposed global changes represent four major shifts in emphasis. First, under a new benefit test, it will no longer be enough to show that a service occurred; a business must show there was a reasonable expectation the service would deliver value before money changed hands. Second, cost-allocation keys must reflect who actually benefited from a shared service rather than a rough split between group entities. Third, multinationals must separate activities that serve more than one purpose instead of bundling them into a single charge. Fourth, the burden of proof shifts earlier in the timeline, moving from after-the-fact justification toward contemporaneous evidence that the decision to pay for a service was genuinely considered at the time.

Ann Barnshaw Kengaaju, a senior transfer pricing advisor at BDO East Africa, said the benefit test is evolving into a business-case assessment. She noted this shifts the burden of proof toward businesses generating evidence in real time, rather than tax departments reconstructing justifications later. Kengaaju said audits and disputes will increasingly turn on whether a group can demonstrate why a service was needed and what value it was expected to deliver.

Reviewing the same draft, KPMG UK noted that the OECD’s proposed text clarifies that shareholder activities, duplicated activities and incidental benefits are specific situations that fail the benefit test, rather than separate standalone tests. The firm also confirmed that even a loss-making local entity can legitimately receive and pay for an intra-group service. The OECD stressed that the document does not yet reflect a consensus position and that taxpayers should not treat the proposed approaches as settled law while the consultation remains open.

For corporate taxpayers in Uganda, the shifting global rules carry immediate domestic legal consequences. Most countries can watch an OECD consultation unfold and decide later whether to adopt the results. Uganda’s regulations, however, leave no such room. The Income Tax Regulations reference the OECD guidelines as updated from time to time, meaning that whatever the organization finalizes automatically becomes Ugandan law without a statutory instrument or implementation delay. For taxpayers, the closing of the global comment window on July 22 is effectively the only opportunity to influence a rule before it takes domestic legal effect.

The Uganda Revenue Authority has spent the past decade building the capacity to enforce these standards. Its use of cross-border information exchanges to interrogate intercompany arrangements rose from two requests in 2012 to more than 170 between 2014 and 2022. During that period, the authority recovered more than 259.9 billion shillings.

Corporate leadership at the tax authority has historically emphasized the high stakes of these cases. Commissioner General John Musinguzi has previously described transfer pricing as a globally sensitive area of tax administration.

The Tax Appeals Tribunal also set a relevant domestic precedent before the OECD moved. In a 2021 ruling involving Total E&P Uganda, the tribunal held that the burden falls on the taxpayer to prove a service delivered a genuine economic benefit, rather than on the revenue authority to prove it did not. The OECD’s new benefit test largely formalizes an international standard that Uganda was already applying domestically.

Uganda’s position varies when compared with its neighbors. Kenya is further along procedurally, having issued dedicated intra-group services guidelines in 2021, adopted a full OECD-aligned three-tier documentation framework in 2023 and introduced advance pricing agreements through its Finance Act 2025. Tanzania and Rwanda occupy a middle position, while South Sudan and the Democratic Republic of the Congo are still building basic transfer-pricing infrastructure. Because no East African Community-wide framework ties these regimes together, a bank or telecommunications operator running shared regional services must defend five separate versions of the same argument across five tax authorities.

Across the African continent, the binding constraint for implementing these shifting rules is data. The African Tax Administration Forum and the OECD ran joint capacity-building workshops across more than a dozen African countries between 2025 and 2026. Participating officials consistently noted a shortage of reliable local comparable-company data.

That scarcity cuts both ways under the proposed OECD approach. A test built around a documented business rationale, rather than benchmarking arithmetic, is easier to apply when comparables are thin. However, it rewards multinational groups with disciplined internal record-keeping and penalizes those without it.

None of this suggests that intra-group management fees are inherently improper. Centralized functions such as information technology systems, treasury management and risk analysis run across multiple countries are a routine and efficient feature of multinational structures. What is changing is the standard of proof required during an audit.

Under the existing approach, a business could largely satisfy an audit by showing the price charged matched a benchmarking study of what comparable companies charge for similar services. Under the proposed revisions, businesses will need contemporaneous evidence that a service was planned, delivered and priced at the time it occurred, with corresponding improvements expected in record-keeping by the head office issuing the charge.

For Stanbic, the tribunal proceedings will turn on facts specific to its own arrangements with Standard Bank Group. But the case is unfolding at a moment when the international standard against which those arrangements will ultimately be judged is itself in motion. Uganda is bound to absorb whatever the OECD settles on, by operation of its own regulations, the moment the final document is signed in Paris.