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Temporary relief for Coca Cola in battle over UGX 58Bn tax bill

An audit of Coca Cola Uganda between January 2014 and December 2017 found that the beverages maker had not paid 58.1 billion Shillings in taxes.

Kampala, Uganda | THE INDEPENDENT | Century Bottling Company Limited is set for a fierce fight with the Uganda Revenue Authority over a tax bill amounting to 58 billion Shillings.

According to an assessment by URA, an audit of Coca Cola Uganda between January 2014 and December 2017 found that the beverages maker had not paid 58.1 billion Shillings in taxes. But Cola rejected URA’s position and dismissed the assessment which was presented to the company in January 2020.

In April 2020, the tax body also rejected Coca Cola’s objection and ordered it to pay the money prompting Coca Cola to run to the Tax Appeals Tribunal. However, Coca Cola was expected to pay 30 percent or 17.4 billion Shillings of the assessed bill before the case can be heard by the tribunal in line with provisions of the Tax Appeals Tribunal Act.

The act requires that whoever objects to the tax audit assessment must deposit 30 percent of the assessed money to URA before the tribunal decides their objection. Coca Cola had offered to pay this money in installments stating that its activities had been affected by coronavirus disease which has cut its sales by 55 percent between March and April 2020. It argued it had other costs to meet to remain operating including staff wages.

The offer was rejected by URA arguing that the soft drinks maker had the capacity to pay the required money. URA also said the judges at the Tax Appeals Tribunal did not have powers to decide whether Coca Cola paid the deposit in full or installments.

But in what looks like a temporary relief, the judges have agreed with Coca Cola that it can pay the 30 percent in four equal installments as it awaits the hearing of its case. Judges Asa Mugenyi, Christine Katwe, and Siraj Ali say the applicant is granted a temporary injunction restraining URA from collecting the tax assessed until the case has been disposed off.

The justices said URA is aware of loses that companies have incurred during coronavirus and should not have objected to Coca Cola’s request to pay the deposit in installments.

The ruling sets a precedent that companies can now pay the 30 percent of the assessed tax bill in installments, a relief to some companies that struggle with cash flow.

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