Urgent Reforms Needed for Uganda's Tax Dispute Resolution System

Uganda’s tax disputes often arise from URA audits, assessments, or penalties, straining taxpayer relations. The Alternative Dispute Resolution (ADR) system aims to resolve issues through dialogue, avoiding prolonged court battles, yet real-world results are inconsistent.

Taxpayers must apply for ADR within just seven days of an objection decision, a timeline many professionals deem too restrictive. The 2023 Tax Procedures Code Regulations lack clear exceptions for late evidence, leaving some without recourse despite valid claims.

Resolution times are excessive, with audits lasting up to five years for transfer pricing cases, potentially extending disputes over a decade. TAT Chairperson Crystal Kabajwara calls this ‘not commercial,’ pushing for statutory ADR deadlines. URA targets 28 days internally by boosting staff capacity.

Audit flaws exacerbate issues, including poor record-keeping and repeated document requests across stages. Automation could integrate data from audits to objections and TAT, as noted by URA’s Catherine Donovan Kyokunda.

Provisional tax practices hinder businesses, with delays in clearances even for zero-profit reports. The 30% prepayment rule for TAT appeals burdens cash-strapped firms, though recent rulings offer relief for legal disputes.

Benchmarking with Rwanda and UK systems highlights overlaps in Uganda’s processes. Officials advocate pausing appeal timelines during ADR and clearer regulations to cut litigation.

Reforms addressing timelines, exceptions, and overlaps could restore confidence in the system.

Source: Daily Monitor (Uganda)