SMEC International Ltd v Uganda Revenue Authority
Tax Appeals Tribunal, Application No. 75 of 2019. 15 November 2024.
Head office charges
An engineering firm's Ugandan branch deducted head office and regional charges that at times exceeded 90% of its revenue.
The situation
The Revenue Authority disallowed head office cost allocations, overhead recharges and regional charges claimed by the Ugandan branch of an Australian engineering consultancy for 2011 to 2016. The branch said an earlier audit had settled the matter and part of the assessment was time-barred.
How it was resolved
The Tribunal upheld the disallowance. The earlier review covered only withholding tax on management fees; new information allowed assessment outside the usual limit. The documents did not show which services were provided, by whom, for which project or with what benefit to the branch, and charges reaching over 90% of revenue invited scrutiny. A verified withholding tax credit of over UGX 1.3 billion was remitted to be offset.
What a practitioner takes from it
For any intra-group charge, keep the service description, the people, the project link and the benefit.
A narrow earlier audit does not protect against a wider later one.