Bondo Tea Estates Ltd v Uganda Revenue Authority
Tax Appeals Tribunal, Case No. 65 of 2018. March 2021.
The price of green leaf
A tea estate sold green leaf to a related factory. The Revenue Authority said the price was too low, using prices it collected two years later.
The situation
A tea out-grower sold green leaf to an associated factory at 320 shillings a kilo for the year to March 2017. The Revenue Authority, citing prices of 500 to 700, adjusted the price and assessed about UGX 544 million including penalty and interest. Its field survey covered five out-growers in September 2018.
How it was resolved
The Tribunal allowed the appeal. Buyers had agreed a factory price of 280 shillings in 2015, so 320 was above the market benchmark; prices from 2018 could not price 2016/17; the field report was unsigned, unsourced and too small; and transport, location and leaf quality were ignored.
What a practitioner takes from it
A transfer pricing adjustment needs comparables from the same period, documented and adjusted for differences.
An industry-agreed price can serve as the benchmark.