URA Refunds Shs2.4 Billion to Property Developer for Wrongly Levied VAT

The Uganda Revenue Authority (URA) has disbursed over Shs2.4 billion to Canaan Sites Limited, a real estate firm, after admitting to mistakenly collecting Value Added Tax (VAT) on transactions involving unimproved land. This payment concludes a lengthy legal battle that reached the Tax Appeals Tribunal and the High Court.

The consent settlement mandates URA to refund the Shs1.2 billion in unlawfully collected VAT, along with an equivalent Shs1.2 billion for accrued interest, in addition to Shs36 million for legal expenses. URA’s Commissioner for Legal Services and Board Affairs confirmed that the principal sum and interest were paid in May 2026.

The core of the dispute was the Tax Appeals Tribunal’s 2024 ruling that URA had improperly collected VAT when Canaan Sites sold unimproved land. The company contended that such transactions are exempt under the VAT Act. While URA initially contested this, arguing the company hadn’t proven the tax was paid from its own funds, the Tribunal sided with Canaan Sites after reviewing financial records and sale agreements.

The Tribunal determined that URA’s retention of these funds constituted unjust enrichment, especially as the tax authority failed to provide evidence that the tax burden was passed on to customers or that official tax invoices were issued. The ruling emphasized that delayed refunds deny taxpayers the opportunity to utilize their funds for investment and business operations, justifying the payment of interest.

Despite this significant payout, legal representatives for Canaan Sites indicate that over Shs500 million in taxes, allegedly collected erroneously between 2013 and 2015, is still subject to ongoing recovery efforts.

Source: Daily Monitor (Uganda)