Last Month, MTN faced a tax demand rule from the Uganda Revenue Authority (URA) Instructing the telco to clear listed tax arrears. However, the authority’s rule wasn’t the first to shine on the telcos finance wing, to which a clarification became inevitable.
In August 2016, URA issued MTN with an assessment of UGX 326,996,917,906 for unpaid taxes arising between the period 2011-2014. By Civil Suit 986 of 2016, MTN challenged the assessment in the High Court and a prolonged re-examination of the available evidence ensued.
This resulted in-to a partial consent judgment in June 2018 in favor of the telco, attarcting a revision of the assessment amount to UGX 24,273,771,472.
This residual amount was subject to the interpretation of a technical issue i.e. whether the taxable value of excise duty on airtime was to be charged on usage or at the point of sale, which was referred to the Tax Appeals Tribunal vide TAT Application 8 of 2019.
During the proceedings, both parties conducted further reconciliation and as of 3rd March 2020, the agreed reconciled possible tax, outstanding pending further considerations, was further significantly reduced.
On 28 May 2020, the Tax Appeals Tribunal ruled that excise duty should be charged at the point of sale and accordingly upheld the assessment against MTN.
To prevent an overpayment of the reconciled amount, which is significantly lower than UGX 24,273,771,472, MTN on 29 May 2020 obtained an interim order against the enforcement of the several agency notices issued by URA.
At the moment, MTN is studying the TAT ruling and taking advice on possible implications. Once the telco makes a decision on its stand with the authority, it has confirmed that a fair, legal, and ethical move will be taken to comply with any future notices.