URA Refunds Shs2.4 Billion After Losing Tax Battle

By: Nassar

KAMPALA — The Uganda Revenue Authority (URA) has paid more than Shs2.4 billion in refunds, interest, and legal costs to a property developer after a prolonged legal battle over taxes that were wrongly collected on land transactions.

The payment follows a ruling that found URA had unlawfully charged Value Added Tax (VAT) on the sale of unimproved land, which is exempt from VAT under Uganda's tax laws.

The beneficiary, Canaan Sites Limited, received approximately Shs1.2 billion as a tax refund and another Shs1.2 billion in accumulated interest after authorities delayed repayment for several years. URA also paid legal costs amounting to about Shs36 million.

The dispute stemmed from transactions conducted between 2013 and 2015, during which the developer paid VAT on land sales. The company later challenged the tax assessment, arguing that the land in question was exempt from VAT and that the taxes had been collected in error.

After reviewing evidence including sales agreements, tax returns, advertisements, and financial records, the Tax Appeals Tribunal ruled in favour of the developer. The tribunal found that the company had borne the tax burden itself and that URA had failed to prove the tax costs had been transferred to buyers.

The ruling emphasized that retaining the money would amount to unjust enrichment by the tax authority and ordered a full refund together with interest.

The case highlights the importance of accountability in tax administration and demonstrates that taxpayers have legal avenues to challenge tax assessments they believe are incorrect.

Tax experts say the decision could encourage other businesses and individuals to seek redress where taxes have been improperly assessed or collected. However, they caution that taxpayers should maintain proper records to support any future claims.

Despite the settlement, the dispute may not be completely over. Lawyers representing the developer have indicated that an additional claim exceeding Shs500 million remains outstanding and is still being pursued.

The payout comes at a time when government agencies are under increasing pressure to improve efficiency, transparency, and fairness in public financial management.

For many observers, the case serves as a reminder that while taxes remain essential for national development, tax authorities must operate within the law and ensure that taxpayers are treated fairly.