Why the Tax Appeals Tribunal has blocked URA from collecting Shs169.9bn from MTN Uganda
In a ruling delivered in Kampala on March 23, 2026, the Tribunal found that URA failed to follow due process in issuing the tax demand, rendering the requirement for MTN to first pay 30 percent of the assessed tax inapplicable.
The Tax Appeals Tribunal has ruled in favour of MTN Uganda Limited, halting the Uganda Revenue Authority (URA) from collecting Shs169.9 billion in disputed taxes and waiving the mandatory 30 percent prepayment requirement.
In a ruling delivered in Kampala on March 23, 2026, the Tribunal found that URA failed to follow due process in issuing the tax demand, rendering the requirement for MTN to first pay 30 percent of the assessed tax inapplicable.
The case arose from a tax dispute involving Shs169,936,299,472 linked to mobile money transactions. URA had demanded that MTN pay at least 30 percent of the disputed amount, about Shs50.9 billion, before the matter could proceed.
However, the Tribunal held that this legal requirement only applies where there is a valid tax assessment followed by a proper objection by the taxpayer.
“The statutory obligation to pay 30 percent arises within a valid dispute resolution framework,” the panel ruled. “In this case, the objection decision was not founded on a valid assessment.”
The Tribunal found that URA issued an objection decision regarding the mobile money audit without first issuing a formal assessment or giving MTN an opportunity to object, as required under the law.
This procedural flaw, the judges noted, violated the structured dispute resolution process under Uganda’s tax laws, which requires an assessment, an objection by the taxpayer, and then an objection decision.
As a result, the Tribunal concluded that the “pay now, argue later” principle could not apply in the circumstances.
In addition to waiving the 30 percent prepayment, the Tribunal granted a temporary injunction restraining URA from enforcing or collecting the disputed tax until the main application is fully determined.
The ruling effectively preserves the status quo and protects MTN from immediate enforcement action that the company argued would significantly disrupt its cash flow and operations.
While the Tribunal rejected MTN’s alternative request to substitute the 30 percent payment with a bank guarantee, stating that the law requires actual payment, not security, it noted that this issue was moot given its primary finding.
The decision marks a significant development in tax jurisprudence, reinforcing the importance of due process in tax administration and limiting the automatic application of prepayment requirements where procedural irregularities exist.
