Court stops URA from enforcing disputed tax assessment on betting firm

Kampala, Uganda | THE INDEPENDENT | The Commercial Division of the High Court has ordered the Uganda Revenue Authority (URA) to halt the collection of at least sh24.7 billion in disputed taxes from betting and gaming company Massalia SMC Limited, pending the determination of an appeal before the court.

The dispute traces back to a June 2025 decision of the Tax Appeals Tribunal (TAT), which faulted URA’s method of assessing gaming taxes. In that ruling, the Tribunal invalidated URA’s practice of computing gaming tax based on gross deposits treated as stakes and gross withdrawals treated as winnings, describing the approach as legally flawed.

The Tribunal held that the gaming tax should instead be calculated on the net difference between stakes and pay-outs, while withholding tax should be based on actual winnings paid out, not mere withdrawals. Dissatisfied with the TAT ruling, URA filed an appeal in the High Court.

However, before the appeal could be heard and determined, the tax authority issued a fresh tax assessment against Massalia for the period September 2023 to June 2024, applying the same computation methodology that the Tribunal had already rejected.

Massalia challenged the move, arguing that enforcing the new assessment would amount to an abuse of the judicial process. The company contended that URA was attempting to implement, through a different assessment period, a methodology that was already the subject of litigation and had been decided in its favour by the Tax Appeals Tribunal.

In response, URA argued that the High Court lacked jurisdiction because the new assessment had not first been challenged before the Tax Appeals Tribunal. The authority also maintained that the assessment was new and distinct from those previously litigated, since it covered a different tax period.

In her ruling on an interim application filed by Massalia, Judge Suzan Odongo rejected URA’s arguments, finding that merely changing the period of assessment did not transform the assessments into new disputes. She held that the impugned assessments were, in substance, a continuation of the same dispute already on appeal before the High Court.

The judge noted that allowing URA to enforce the assessments while the appeal was pending would undermine the appellate process and risk causing irreparable harm to the company. She observed that enforcing a 24.7 billion Shillings tax demand based on a methodology already declared unlawful by the Tribunal could lead to the collapse of Massalia’s business before the appeal is concluded.

Justice Odongo further emphasised the public interest implications of the case, pointing out that Massalia employs about 3,500 people whose jobs would be put at risk if the company were forced to pay the disputed taxes immediately. She held that such losses could not be adequately compensated through damages.

The court found that the balance of convenience favoured maintaining the status quo until the appeal is resolved. While acknowledging URA’s argument that revenue collection is vital to the economy, the judge stressed that public interest is not served by collecting taxes unlawfully.

In granting the stay, the court held that it was properly exercising its appellate and inherent jurisdiction under the Tax Appeals Tribunal Act, the Judicature Act, and the court’s inherent powers to protect the subject matter of an ongoing appeal.

The judge warned that allowing an administrative body to enforce a disputed methodology simply by altering assessment dates would amount to circumventing judicial oversight.

As a result, URA has been restrained from enforcing the disputed tax assessments against Massalia SMC Limited until the High Court determines the pending appeal.

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URN