Efficiency and independence concerns shadow URA tax mediation success

KAMPALA, Uganda — The Uganda Revenue Authority’s Alternative Dispute Resolution (ADR) system is under renewed scrutiny as taxpayers and legal practitioners raise concerns over procedural delays and the neutrality of the mediation process.

While the tax body has successfully resolved thousands of cases through the out-of-court mechanism, critics argue that the lack of statutory deadlines and the presence of internal oversight committees create a bottleneck for businesses seeking quick resolution.

Internal data shows that between July 2022 and June 2025, the URA received 6,823 ADR applications and settled 6,204. Despite this volume, the absence of legally mandated timelines remains a primary grievance. In response, the tax authority has set an internal target to resolve disputes within 28 days for the current financial year.

To meet this goal, we have increased the number of staff handling ADR matters and strengthened their capacity, said Catherine Donovan Kyokunda, URA commissioner for legal and board affairs. She noted that the technical complexity of tax cases often necessitates extended periods for legal and factual analysis.

A significant point of contention is the ADR Oversight Committee, an internal body established to provide quality assurance for settlements. Because ADR often results in substantial reductions of initial tax assessments, the URA maintains that this extra layer of review ensures all adjustments are legally sound.

In the 2022/23 financial year, tax confirmed at the objection stage dropped 34 percent from 290.8 billion shillings to 192.2 billion shillings following ADR. A similar trend continued into the 2024/25 period, where 1 trillion shillings in contested taxes fell to 929 billion shillings, a 12 percent reduction.

These adjustments show that ADR is correcting issues and providing feedback to the objections process, Kyokunda said. She added that the oversight team works full-time to ensure their reviews do not introduce further stagnancy.

Questions regarding the independence of the process also persist. To address perceptions of bias, the URA moved the ADR function from the domestic taxes department to the legal department in 2024. This restructuring aims to separate mediators from the audit and assessment teams that originally issued the tax bills.

The matter is reviewed by a different group of people who examine the facts and the law independently, Kyokunda said. She noted that the authority remains open to feedback if the public still perceives a lack of neutrality.

Despite these reforms, practitioners argue that true neutrality is difficult to achieve when the mediation remains housed within the institution responsible for revenue collection.