The Tax Appeals Tribunal has dismissed Standard Chartered Bank’s challenge to a UGX 1,107,188,918 withholding tax assessment issued by the Uganda Revenue Authority (URA).
The dispute concerned withholding tax liabilities under Section 85, now Section 84, of the Income Tax Act, arising from transaction and account maintenance fees charged by foreign correspondent banks between January 2016 and 2019.
Standard Chartered maintained foreign nostro accounts with correspondent banks in several major financial centres, including the United States, Germany, Finland, Canada, the United Kingdom and Switzerland, to support international trade and foreign currency settlements.
Following a compliance review, URA concluded that the bank had an additional withholding tax obligation on charges paid to the overseas institutions. Standard Chartered contested the assessment, arguing that the transaction fees were ultimately borne by customers, that account maintenance fees qualified as exempt interest under Section 83(5) of the Income Tax Act, that the applicable double taxation agreements had been misapplied, and that part of the assessment period was time-barred.
In its ruling, the Tribunal rejected the bank’s arguments and sided with URA, emphasizing the need to look beyond formal labels to the commercial substance of the transactions. The bench found that, despite the economic burden being passed on to customers, Standard Chartered remained the legal party receiving and paying for the services, which triggered withholding tax obligations.
Commissioner Legal Services and Board Affairs, Mrs. Catherine Donovan Kyokunda, said: “Rigorous audit work and transaction tracking are essential to pierce through formal labels and identify underlying taxable services. Our examination of the practical flow of funds ensures that local institutions correctly account for withholding tax obligations on international correspondent charges rather than bypassing compliance through economic pass-through arrangements.”
The Tribunal also held that the bank had not provided sufficient evidence to support its claim that account maintenance fees were exempt interest, and accepted URA’s treatment of the payments under the relevant double taxation agreements as technical fees rather than general business profits.
On the timing issue, the bench found that the assessments were not time-barred, noting that fresh information from a prior refund audit justified the review. The application was dismissed with costs awarded to URA.
Stronger compliance
While addressing the URA Bankers’ Conference at Mestil Hotel on April 23, 2026, URA Commissioner General John Musinguzi called for stronger compliance among banks.
His remarks stemmed from the fact that tax non-compliance remains a concern despite growing contributions from the financial sector. While many institutions report strong profits reflected in dividends, some still fall short of meeting their full tax obligations, undermining fairness in the tax system.
Delayed payments, unresolved disputes, and incomplete disclosures continue to pose challenges, with some cases dragging on for years.
‘’These gaps highlight the need for stronger collaboration, enforcement, and better cooperation between taxpayers and authorities,’’ said the CG.
The CG emphasized that institutions have a responsibility not only to clients but to the country, urging them to pay their fair share and actively support the tax compliance processes.
Overall, he called for greater accountability, timely compliance, and a shared commitment to national development through proper tax practices.
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