Kampala, Uganda | URN | The Commercial Division of the High Court has ordered Airtel Uganda to pay 1.1 billion Shillings to Uganda Revenue Authority after losing a tax dispute over imported telecommunications equipment.
In his ruling, Justice Stephen Mubiru set aside a decision of the Tax Appeals Tribunal, which had earlier directed URA to re-evaluate Airtel’s tax obligations. The dispute arose from Airtel’s importation of a Broadband Processing Board (BPB), a machine used to manage high-speed data transmission, traffic switching, and user access.
Court records show that Airtel declared the value of the BPB Model N2 unit, supplied by Zhongxing Telecommunications Equipment Corporation, at 1,350 US dollars. However, around the same period, another telecommunications company in Uganda declared identical equipment from the same manufacturer at 10,200 dollars per unit. This discrepancy prompted URA to question Airtel’s valuation and request additional documentation.
Following a customs spot audit at Airtel’s warehouse, URA established that the imported equipment was identical to that declared by the other operator. As a result, the tax body abandoned the transaction value method and instead applied the “transaction value of identical goods” approach. This reassessment increased Airtel’s tax liability to 1.1 billion Shillings for the consignment. However, the court records do not show how many units were in the consignment.
Airtel challenged the decision before the Tax Appeals Tribunal, which ordered URA to reconsider the valuation using Airtel’s purchase receipt. However, Airtel also contested that ruling, arguing that the Tribunal should have nullified the additional tax assessment altogether rather than ordering a review.
In overturning the Tribunal’s decision, Justice Mubiru found that it had erred by allowing Airtel to introduce new evidence, specifically the purchase receipt, that had not been presented when URA initially requested supporting documentation. He held that URA was justified in departing from the transaction value method after Airtel failed to substantiate its declared price when given the opportunity.
The judge concluded that the tax assessment was valid despite procedural flaws in the Tribunal’s handling of the case. He emphasized that where an appeal succeeds on technical grounds but the substance of the tax liability remains sound, the court may uphold the liability while correcting procedural errors.
The court also rejected Airtel’s explanation that the low price resulted from a framework agreement between its parent company and the supplier, which allegedly allowed discounted purchases for subsidiaries. Justice Mubiru noted that Airtel did not provide documentary evidence to support this claim.
He ruled that URA was justified in resorting to alternative valuation methods to ensure fairness and prevent undue advantage. The court found that an importer’s failure to provide relevant and requested documentation allows tax authorities to disregard declared values and apply other recognized methods of assessment.
As a result, Airtel is required to pay the additional tax as assessed by URA.
