The Tax Appeals Tribunal (TAT) slapped a fine of UGX 20 Million on Nile Breweries
Limited (NBL) and UGX 30 Million on Standard Chartered and Stanbic Bank for
contempt in a ruling read yesterday.
This follows NBL’s earlier application to TAT objecting to URA’s additional assessment
of Local Excise Duty of UGX 8,093,539,724 and Value Added Tax of UGX
6,098,292,276. Subsequently, on 7th March 2022, the tribunal granted a temporary
injunction order restraining URA from collecting the said taxes from NBL.
As a condition for the injunction, TAT directed NBL to pay 30% of the tax in dispute
translating to UGX 4,257,549,600, which the company refused to pay.
Despite several reminders by URA, NBL did not comply with TAT’s directive. This
prompted the authority to issue third party agency notices on NBL’s bankers, Standard
Chartered Bank (SCB) and Stanbic Bank (SB) requiring them to remit 30% of the tax on
behalf of their client. However, this did not yield any fruit as the banks ignored the
agency notices.
URA proceeded to file for contempt in TAT. In response, NBL filed an application
seeking interpretation of the law relating to the 30% tax deposit.
This interpretation application was however dismissed with costs, on objection by URA.
In their defence, NBL and the banks denied that they were in contempt of the TAT
Order. The tribunal however disagreed and after evaluating the evidence presented,
ruled that NBL and the banks were in contempt of the TAT Orders. Consequently, TAT
fined NBL Ugx 20 Million while the banks were fined Ugx 30 Million each.
The banks are also to jointly pay Ugx 28,710,756 in damages to URA. NBL must still
pay 30% of the assessed tax.
URA was represented by George Okello, Assistant Commissioner Litigation and
Counsel Tonny Kalungi.
Okello noted that the ruling is very important for it reasserts the principle of respect for
court orders and the Rule of law. He reckoned that quite often, banks ignore URA’s
demands for tax remittance on behalf of their customers who have tax debts with URA.
Okello added that this ruling will enable the banks to be more compliant.
Standard Chartered Bank and Stanbic bank were represented by Sebalu and Lule
Advocates and AF Mpanga Advocates respectively while NBL was represented by
Meritas Advocates.
