Demystifying Tax Disputes: ADR and Tax

Appeals Tribunal Explained

September 2023
Table of Contents

1. Tax Dispute
2. Current Dispute Resolution
3. Tax Appeals Tribunal
4. Alternative Dispute Resolution
5. Settlement Agreement
6. Conclusion

September 2023 2
Tax Dispute
01
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Tax Disputes

Definitions
• A tax dispute is a disagreement between a taxpayer and the Uganda Revenue Authority (URA) over the amount of taxes owed or other tax-
related matters

How to resolve disputes.

• Payments: Payments refer to the transfer of funds from a taxpayer to a tax authority to satisfy their tax liability or obligations.
• Objections: Is a formal process where a taxpayer disputes an assessment made by the URA regarding their tax liability, penalties, interest
charges, or refund claims.
• Alternative disputes resolution (ADR): Is a voluntary facilitated process of settling tax disputes between a taxpayer and the Commissioner
where the taxpayer is dissatisfied with the decision of the Commissioner.
• Tax Appeals: The Tax Appeals Tribunal (TAT) is an independent body established to handle tax disputes in Uganda. It operates separately from
the URA and is responsible for reviewing and making determinations on tax-related cases brought by taxpayers who disagree with decisions or
assessments made by the URA.

September 2023 4
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Tax Dispute

Historical treatment of tax disputes

• Historically, tax disputes at URA were typically handled through
administrative channels before being escalated to the TAT.
• Objections: Taxpayers had the option to file objections with URA.
This involved submitting online applications outlining the grounds for
dispute within 45 days of receipt of the assessment and providing
supporting documentation. URA would review the objection and
respond with its decision within 90 days.
• Appeals Unit/Tax experts of URA: It was an informal appeals
avenue that was not provided in the law.
• Appeals to TAT: A dissatisfied taxpayer with URA's objection
decision, could appeal to TAT within 30 days of receipt of the
objection decision. TAT is an independent body established to hear
and determine tax disputes.
• Judicial Review: In cases where either party disagreed with the
TAT’s decision, they could seek a judicial review in the High Court of
Uganda on points of law. This allowed for a legal assessment of the
tribunal's decision. This had to be done within 30 days of receipt of
the TAT decision.

September 2023 5
Current Dispute Resolution
02
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Current Dispute Resolution

Current Dispute Resolution

a) Objection
b) ADR
c) TAT
d) High Court

• Legal framework
• Section 24(11) and (12) of the Tax Procedures Code Act (TPCA), 2014: A taxpayer dissatisfied with a decision of the commissioner may resolve
the dispute using ADR procedure.
• TAT is governed by the Tax Appeals Tribunal Act,Cap.345, Laws of Uganda.

September 2023 7
Tax Appeals Tribunal
03
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Tax Appeals Tribunal

• Section 14 of TAT Act (1): A person who is aggrieved by a tax • Include reasons for the application.
decision may apply to the tribunal for a review of the decision.
• URA v Rabo Enterprises - TAT is the court of first instance.
• Section 15(1): Payment of 30 percent of the assessed tax • Section 17(1):The URA must submit to TAT, within 30 days, of
amount while awaiting a final resolution. receiving an application for the review of a taxation decision by TAT:
• Electric Power services Ltd VS URA, judgement of August 2023. 1. The official notice of the decision,
• Nile Breweries Limited VS URA, Judgment of May 2022.
2. A statement outlining the reasons behind the decision,
• For perishable goods, they are released to the taxpayer right after
payment of the specified tax amount and the URA should be given 3. Any other relevant documents within its possession or control that
surety equivalent to the tax assessed. are essential for TAT’s comprehensive assessment of the decision.
• In TATA v URA of, the taxpayer was allowed to offset their tax credits
against the 30% TAT payment.
• Taxpayers may also be granted between 3 and 4 instalments to Section:17A. Mediation
make the 30% payment to TAT.
• A mediator is appointed by TAT.
• Section16: An application to a tribunal for a review shall:
• Mediation period is 60 days
• Be in writing in the prescribed form.

September 2023 9
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Positive aspects of the TAT

Positive aspects of the TAT

• TAT is typically independent of the tax authority, ensuring a fair and
unbiased platform for taxpayers to challenge tax decisions.

Shortcomings of TAT
• A lengthy and costly legal process, which means several taxpayers
are unable to effectively obtain legal redress in a timely manner.
• Several taxpayers are often not able to pay the mandatory 30 percent
of the tax assessed before one can make an application for review to
TAT.

September 2023 10
Alternative Disputes Resolution
04
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Alternative Disputes Resolution

Alternative Disputes Resolution ADR Procedure

• Is a voluntary facilitated process of settling tax disputes between a • The application of the ADR procedure specified in the regulations
taxpayer and the Commissioner where the taxpayer is dissatisfied shall be voluntary and proceed as follows:
with the decision of the Commissioner.
• A taxpayer who is dissatisfied with a tax decision of the
Aspirations of the ADR commissioner may within seven days after being served with the tax
decision,
• To allow for more tax disputes to be resolved earlier, thereby giving
both the taxpayer and the revenue authority greater certainty and the • The application shall be in writing,
ability to channel scarce resources into more productive activities.
• ADR proceedings not affect the timelines for TAT applications.
• The ADR accords with URA ‘moving away from a “command and
control” culture to one designed to build trust, support, and respect in
the community’, which in turn encourages voluntary compliance.
• Improves the efficiency and effectiveness of tax administration as well
as provide flow-on improvements to taxpayer compliance by making it
easier to resolve disputes with URA.
• No requirements to 30 percent of tax in dispute.

September 2023 12
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Alternative Disputes Resolution
Methods of ADR
a) Conciliation: involves the appointment of an independent conciliator
by the Commissioner and the taxpayer, to facilitate communication
between the Commissioner and the taxpayer, to explore settlement but
without offering an opinion on the merits of the arguments of either side.
b) Negotiation: In this method, the Commissioner and the taxpayer
agree to hold discussions relating to the tax dispute and exchange of
information to reach an amicable settlement.
.Disputes eligible for the ADR procedure
• Likelihood to promote fairness, maximization of resources and proper
management of the tax system.
• The cost benefits of litigation with respect to collection of the amount,
litigation costs, and prospects of success in court or TAT.
• Complexity, factual or quantum issues in contention.
• Promotion of compliance by the taxpayer, a group of taxpayers or the
business sector.
• The cause of the tax dispute ie result of a misunderstanding or
miscommunication between the Commissioner and taxpayer
Commissioner response timelines
• Eligible ADR applicants will be invited in writing by Commissioner
within seven working days from the date of filing the application.
• Ineligible ADR applicants will receive written rejection notices from
the Commissioner within fifteen (15) working days from the date of
filing the application.
Rejection of ADR applications
• The settlement is likely to contravene any law of Uganda.
• The matter in dispute is regard to interpretation of the law.
• It is in the public interest to have the court of tribunal determine the
tax dispute.
• There is evidence of deliberate or consistent non-compliance by the
taxpayer on the matter in dispute.
• the tax dispute related to the case of an informer.
• An application is filed out of time provided for under these
regulations.
• The tax dispute involves fraud.
September 2023 13
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Alternative Disputes Resolution
ADR MEETINGS
• The Commissioner shall invite the taxpayer for an ADR procedure
meeting where application is satisfactory to discuss.
• The costs of participating in the ADR procedure and the party to bear
the costs.
• The method to be adopted in the ADR procedure.
• The timelines and schedule of the ADR proceedings.
• The issues to be considered and resolved through the ADR
procedure.
• The terms and conditions to govern the ADR proceedings.
• Any other matter relevant to resolving the dispute through the ADR
procedure.
Conduct of the alternative dispute resolution
procedure
• Each party will be allowed to present its case and have witnesses.
• The agreement of the parties to settle the dispute will be based on
the evidence submitted during the ADR proceedings. Information
requested and not submitted will not be allowed during ADR
proceedings TPCA Section 42(3a).
• ADR proceedings maybe postponed under justifiable causes..
• Subject matter experts maybe invited to ADR proceedings to provide
the required expertise
September 2023 14
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Alternative Disputes Resolution

WITHDRAWAL FROM ADR PROCEEDINGS Representation

• Mutual agreement to terminate the proceedings.by either or both a) A taxpayer may appear
parties. • In person
• Failure to attend two consecutive ADR sittings. • Through a tax agent
• Negative conduct by one or both parties. • Through an employee of the taxpayer, or
• Through an advocate, and
• Where both parties determine that a settlement cannot be reached.
b) The Commissioner may appear
• Any other ground that the Commissioner or taxpayer considers
reasonable. • by himself or herself
• by a tax officer or
• represented by an advocate.

September 2023 15
Settlement Agreement
05
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Settlement Agreement

Definition
• Issues agreed upon in ADR proceedings will be set out in a settlement agreement signed by the Commissioner and the taxpayer or their
authorized representatives.

Contents of a settlement agreement

• The background to the dispute and the issues of contention.
• The processes and specific actions undertaken during the alternative dispute resolution proceedings.
• The agreed issues and issues not agreed to.
• The taxes payable or, where applicable, the taxes that are not payable and the justification.
• The terms of the settlement agreement.
• The undertaking given by each party, if any
• The agreed mode of payment and payment plan, where applicable.
• The withdrawal of any proceedings pending before the tribunal or court, where applicable.

September 2023 17
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Settlement Agreement
Alterations Of A Settlement Agreement
• Assessments maybe altered to reflect the content of the settlement
agreement.
• The amended tax assessment shall not be subject to an objection or
appeal, except;
• To correct an arithmetic error.
• To commence the execution or enforcement procedure
• To correct an error on the face of the amended or altered
assessment.
• To set aside the alternative dispute resolution decision, or
• To where the content of the altered tax assessment is not in line
with the terms of the alternative dispute resolution.
The commissioner will make the adjustment within 14 days from the
date of signing the settlement agreement.
Other Key Points Of A Settlement Agreement
• It is binding and enforceable against the Commissioner or taxpayer.
• The Commissioner or taxpayer may apply to court to enforce the
settlement agreement due to failure to comply by either party.
• The Commissioner will maintain a register of disputes settled under
the ADR procedure, which shall contain;
• the amount of revenue recovered
• the estimated amount of savings in costs if the dispute was to be
resolved by the Tribunal or court. And potentially foregone.
• Amount of revenue potentially foregone.
• Any other information that the commissioner received during the
ADR procedure.
The Commissioner shall keep records of settlement agreements with
taxpayers for a minimum of ten years from the date of agreement
signing.
September 2023 18
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Settlement Agreement

Shortcoming of the ADR The ADR Application Form

• Timelines: It is not clear how long the (ADR) process ought to take.
By the time a taxpayer is getting to the TAT level, the set timelines
have passed from the date the assessment is issued by the URA
• Because the ADR is a unit within the URA, taxpayers may have
concerns about the level of independence in the appeal process

September 2023 19
Conclusion
06
Demystifying Tax Disputes: ADR and Tax Appeals Tribunal Explained
Conclusion

• TAT application timelines are 30 days from receipt of an objection decision and mandatory payment of 30 percent of tax in dispute. You are
required to have a legal counsel.

• The ADR application timelines of 7days from receipt of an objection decision should be adhered to. We recommend it to taxpayers who could be
financially constrained to pay the 30 percent TAT application requirement.

September 2023 21
Contact Follow us:

Mazars LinkedIn:
www.linkedin.com/company/Mazars
24 Henlon Close,
Luthuli Avenue, Twitter:
Bugolobi, www.twitter.com/MazarsGroup
Kampala, Uganda
Facebook:
www.facebook.com/MazarsGroup
Instagram:
Tel: +256 414 660 071 www.instagram.com/MazarsGroup
Email: info@mazars.ug WeChat:
ID: Mazars

Find out more at www.mazars.com

© Mazars 2023