URA looks to alternative dispute resolution

The Uganda Revenue Authority (URA) has resorted to settling tax disputes out of court, as a way of freeing up the approximately sh1.6 trillion currently tied up in the court system.

The URA commissioner for legal affairs, Patience Tumusiime, said the tax collector is interested in finding alternative means of settling tax disputes because they negatively impact tax collection efforts when they stay long in the court system.

She said as the country continues to battle the COVID-19 pandemic, it is prudent for the taxman to help taxpayers free up useful capital through amicable resolution of tax disputes.

"Some of the cases can stay in the court system for even 10 years. So, we are encouraging the taxpayers to come out, if they feel there are areas we can have a discussion around and we settle," she said.

She said the new strategy was launched three months ago, and, that so far, more than sh100b has been recovered by the taxman.

In the current, adjusted budget, URA is expected to collect about sh19.6 trillion to finance government programmes during the current financial year.

She said, in the meantime, URA would also continue upholding the provision requiring taxpayers who object to its assessment in the Tax Appeals Tribunal (TAT), to pay 30% of the tax assessed before the case is heard.

She said despite the recent ruling of the Constitutional Court nullifying the legal provision, an earlier ruling by the Supreme Court had declared it constitutional, adding that URA would, therefore, not stop enforcing the provision.

"We have an earlier ruling by the Court of Appeal, in the case of the Uganda Projects Implementation and Management Centre (UPMAC) vs URA in 2009. This case also started from the Constitutional Court and there was an appeal in the Supreme Court. The Supreme Court had affirmed that the requirement to pay 30% of the assessed tax was constitutional when balanced with the citizen's duty to pay taxes," she said.

She said in terms of hierarchy, the Supreme Court is superior to the Constitutional Court, and, until the earlier ruling is set aside, the taxman would continue enforcing the provision.

In July 2 020, the Constitutional Court nullifi ed the legal provision requiring aggrieved taxpayers to pay 30% of the disputed tax assessments prior to being heard in the Tax Appeals Tribunal.

The judgment follows a 2009 constitutional petition reference by Fuelex Uganda Limited against URA.

Fuelex contested the payment of sh160m as tax payable from its fuel business covering the period running from June 2005 to September 2006.

Fuelex argued that the legal provision requiring aggrieved taxpayers to pay 30% of the disputed tax assessments prior to being heard in the Tax Appeals Tribunal is unconstitutional, as it contravenes Article 44 of the Constitution.

Meanwhile, URA also declared a surplus in revenue collection for the months of July and August, lifting their hopes further to possibly beating their annual collection target.

John Rujoki Musinguzi, the URA commissioner general, said revenue collected amounted to sh4.07 trillion, against a target of sh2.999 trillion, posting a surplus of sh1.07 trillion.

He said revenue grew by $1.64 (sh64.8b) during the period under review, indicating a slight resurgence from the impact of COVID-19.

"Domestic tax collection in the quarter amounted to sh2.456 trillion, registering an impressive performance of 131.66%. This was sh590.75b above target, and growth of 51.01%," he said.

He said international tax collections totalled sh1.714 trillion during the same time, performing at 138.87%, with a surplus of sh479.79b.