DHL Supply Chain International Ltd v Uganda Revenue Authority
Tax Appeals Tribunal, Not given in the report. Reported 13 June 2022.
A credit note is not a write-off
A logistics subsidiary could not pay its parent for imported IT and management services, so it issued credit notes cancelling them.
The situation
A logistics company received management, IT and connectivity services procured by its German parent for 2014 to 2016. It withheld income tax on them but declared no VAT. Unable to pay, it had the charges forgiven and issued credit notes in 2017, after the audit.
How it was resolved
The Tribunal ordered it to pay VAT of UGX 1,484,422,000. A credit note corrects an error or overcharge in an invoice; it cannot write off a debt. Services between a Ugandan branch or subsidiary and its foreign head office are within VAT.
What a practitioner takes from it
Withholding income tax on imported services does not discharge VAT on them.
Forgiving a debt does not undo the supply.