URA and Tax Appeals Tribunal’s 30% question

Uganda’s private sector pushes for reform of a disputed tax appeals requirement

Kampala, Uganda | JULIUS BUSINGE | For any business in Uganda, receiving a tax assessment from the Uganda Revenue Authority (URA) is normal. What is becoming impossible, however, is paying to challenge it.

Under Section 15(1) of the Tax Appeals Tribunal Act, Cap 341, a taxpayer who wants the Tax Appeals Tribunal (TAT) to hear their case must first deposit 30% of the disputed tax.

If the assessment is for hundreds of millions or billions of shillings, that deposit alone can sink a company – before a single argument is heard on merit.

The Private Sector Foundation Uganda (PSFU) and Uganda Manufacturers Association (UMA), backed by a coalition that includes KACITA, Uganda Bankers Association, Uganda Insurers Association, SEATINI Uganda, Uganda Law Society, and ICPAU, have now formally petitioned Parliament and the Minister of Finance. Their request is simple: amend Section 15 to restore access to justice.

30% blocks justice

Section 15(1) requires a taxpayer who has lodged a notice of objection to pay “30% of the tax assessed or that part of the tax assessed not in dispute, whichever is greater” pending final resolution. That deposit must be made before the TAT will entertain the case.

The provision was introduced by amendment in 2000 and has remained unchanged, even as Uganda’s economy and tax dispute landscape have transformed.

According to the Tax Appeals Tribunal’s own 2025 Performance Report, 410 new applications were filed in the financial year ending June 30, 2025, with a combined disputed tax value of Shs656 billion. New applications have grown by 127% since 2020. The Tribunal resolved 266 disputes in FY 2024/25, unlocking Shs506 billion.

Crucially, the Tribunal found that consent settlements accounted for the highest number of resolved disputes. URA vacated 70% of the tax initially assessed. For every Shs100 that URA had assessed, it later accepted that only Shs30 was due. Yet businesses had to pay 30% on the full assessment just to get through the door.

The TAT’s 2025 Report itself recommends that Section 15 be amended to make the 30% deposit subject to the Tribunal’s discretion. In other words, even the tribunal that enforces the law says the law needs to change.

Courts already ruled?

In the 2009 Constitutional Petition No. 3 (Fuelex (U) Ltd v. URA), the Constitutional Court held that the deposit requirement is unconstitutional in cases where the taxpayer is not disputing the amount of tax but rather the legal basis for the tax itself – for example, arguing that a tax is exempt or assessed under the wrong law.

However, the Constitutional Court could not strike down Section 15 entirely. Only Parliament can do that.

The petition benchmarks Uganda against several jurisdictions. The picture is stark.

Kenya requires only payment of the undisputed portion of a tax bill. When Kenya’s Treasury proposed a 20% deposit in 2023, Parliament rejected it, citing the constitutional right to access justice. Nigeria has no upfront deposit requirement at all. South Africa operates a pay-now-argue-later system, but the Commissioner has discretion to suspend the payment requirement.

The United Kingdom requires no deposit to have a tax dispute heard.

Even Tanzania, which applies one-third of the tax, provides for a waiver or reduction upon good reasons shown. Sri Lanka permits a 10% non-refundable deposit or a bank guarantee. Ghana has statutory mechanisms for waiver, variation, or suspension.

Uganda stands alone with a mandatory, flat 30% deposit and no discretion for the Tribunal, no recognition of bank guarantees, and no statutory instalment framework.

Expert view

To understand how this works in practice, The Independent spoke with John Jet Tusabe, a tax director at BDO East Africa, who has represented numerous taxpayers before the TAT.

On enforcement, Tusabe says URA’s position is very clear: the 30% must be paid in cash. Alternative methods like bank guarantees are not permissible. The TAT has agreed with URA in decided cases, including Bullion Refinery vs. URA and Hua Sheng International vs. URA.

On instalment payments, he notes that while the Tax Procedures Code Act gives URA discretion to allow payment by instalments, obtaining that approval for the 30% deposit is extremely difficult. Taxpayers who cannot secure approval often have to file a separate application at the TAT challenging URA’s denial, which increases the cost of doing business.

On the Fuelex exception, Tusabe observes that what constitutes a “legal basis” challenge remains a grey area. Courts have held that quantum disputes require the deposit, while challenges to legality or procedural propriety may not. But there is no clear test, and such disputes are still pending in appellate courts. He advises that any appeal relying on Fuelex must be carefully structured to show the challenge goes to the legal foundation of the assessment, not merely the amount. Crucially, proceedings before the TAT are confined to the grounds raised at the objection stage with URA, so taxpayers cannot easily introduce new arguments later.

When asked what Parliament could do immediately, Tusabe points to two practical reforms: Reduce the deposit from 30% to 10%, and grant the TAT discretion to permit alternative security like bank guarantees or insurance bonds where a taxpayer demonstrates exceptional or justifiable circumstances.

That approach, he says, would preserve revenue collection while improving access to justice and reducing undue hardship.

The government’s rationale for the 30% rule is not difficult to understand. URA argues that requiring a substantial deposit prevents frivolous appeals and secures revenue that might otherwise be tied up for years while a dispute winds through the tribunal. With Shs656 billion in dispute in a single year, the fiscal risk is real.

But the problem is proportionality. The deposit has no relationship to the merits of the case. A taxpayer with an excellent legal argument but poor cash flow is locked out, while a wealthy taxpayer with a weak case can buy their way in. That is not justice; it is a financial means test.

The government has already conceded the point in one high-profile context. During the East African Crude Oil Pipeline (EACOP) negotiations, the mandatory 30% deposit was identified as a challenge.

Under paragraph 12, Part J of the EACOP (Special Provisions) Act, the deposit for EACOP shall not exceed one million US dollars, and the excess may be covered by a bank guarantee.

If that solution works for a multi-billion dollar oil project, it can work for manufacturers, traders, and NGOs, some experts say.

Eight reform options

The petition sets out eight specific legislative amendments, ranked by priority:

Remove the 30% deposit entirely at TAT level, retaining only payment of undisputed tax. This eliminates the access barrier while preserving revenue at a higher appellate level.

Grant TAT discretion to waive or reduce the 30% where the dispute involves genuine legal, interpretive, or procedural grounds, or where payment would cause hardship. This reflects the Fuelex ruling and the TAT’s own recommendation.

Expressly allow bank guarantees and insurance bonds as alternative security, preserving liquidity.

Reduce the deposit from 30% to 15% (or 15% at TAT plus 15% at High Court).

Introduce a tiered deposit based on quantum: 10% for disputes below Shs50 million, tapering to 2% above Shs1billion.

Defer the 30% obligation until after TAT mediation proceedings are concluded, enabling settlement without enforcement pressure.

Provide for statutory instalment payments with objective eligibility criteria, removing URA’s unfettered discretion.

Mandate automatic application of pre-existing tax credits on the URA ledger towards the 30%, without audit precondition.

Meanwhile, the petition documents four concrete grounds of harm. First, access to justice; cases are dismissed not on merit but on inability to pay.

Second, economic harm; SMEs face liquidity shocks, costly borrowing at 18-21% per annum, and in extreme cases, business closure. For NGOs with donor-restricted funds, paying a tax deposit may be legally impossible without breaching grant agreements. Third, perverse incentives -because URA knows that the 30% deposit blocks many challenges, there is a risk of revenue-driven assessments rather than legally sound ones. The TAT’s finding that URA vacates 70% of assessed tax in consent settlements suggests the quality of assessments has declined.

Fourth, investment climate damage; investors who face inflated tax bills and cannot access a fair tribunal will simply invest elsewhere.

What happens next?

The petition was submitted to the Speaker of Parliament on April 24, 2026, copied to the Attorney General and the Commissioner General of URA. The same petition was submitted to the Ministry of Finance on the same date.

The petitioners affirm the constitutional duty to pay taxes. They are not seeking tax avoidance. They are seeking a fair hearing – and that is a right, not a privilege. Whether the petitioners will achieve their desired outcome remains to be seen in the days ahead.