Patience T Rubagumya, the URA Commissioner Legal Services and Board Affairs
The Tax Appeals Tribunal has affirmed that the lease of equipment amounts to a taxable supply and ordered Multiple ICD Ltd, a Freight Forwarding Company to pay VAT amounting to Shs2.86bn to Uganda Revenue Authority (URA).
Multiple ICD Ltd instituted an application against URA in the Tax Appeals Tribunal seeking review of URA’s decision to issue an assessment of Shs2.86bn against Multiple ICD Ltd as VAT on the lease of machinery.
Multiple ICD Ltd entered into an agreement with Kampala Cement Company Ltd, for the lease of cement making equipment and plant at a rent of USD 65,000 per month for a period of 30 years.
The agreement however contained a “moratorium” period of 3 years i.e. from November 2016 to 31st December 2019 within which parties agreed that VAT was not payable.
URA on the other hand argued that the supply in question was subject to VAT at a rate of 18%.
The Tax Appeals Tribunal has dismissed the Application on grounds that the lease of equipment to Kampala Cement Co. Ltd amounts to a taxable supply.
The Tribunal further held that there is a taxable supply even where money has not been paid but is due.
The Applicant was therefore required to issue monthly VAT invoices to Kampala Cement Co. Ltd and collect VAT before the fifteenth of each month.
The Tribunal was of the view that a clause in an agreement cannot take away the duty to pay tax as this is a statutory duty.
The implication of the above decision is that Multiple ICD Ltd is liable to pay VAT amounting to Shs2.86bn to URA.
URA’s legal department headed by Patience T Rubagumya, the URA Commissioner Legal Services and Board Affairs has in recent months won several tax related cases against big companies.
