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 on Friday, May 6.
This follows NBL’s earlier application to the Tax Appeals Tribunal 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, the Tax Appeals Tribunal 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 Tax Appeals Tribunal. 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 defense, NBL and the banks denied that they were in contempt of the Tax Appeals Tribunal 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.