Ericsson AB v Uganda Revenue Authority
Tax Appeals Tribunal, Application No. 060 of 2020. 29 May 2026.
When the VAT returns and the accounts don't agree
A gap between sales in the VAT returns and sales in the income tax returns became a UGX 9.7 billion VAT assessment, collected from the bank before the objection window had closed. Seven years later, most of it came back.
The situation
A telecoms contractor's monthly VAT sales for 2013 to 2017 added up to less than the annual sales in its income tax returns. The Revenue Authority treated the difference as undeclared taxable sales and assessed VAT of UGX 9,718,600,521 and income tax of UGX 569,540,049.
Before the period for objecting had ended, it served an agency notice on the company's bank; the bank paid over UGX 7,227,681,145, on top of a 30% deposit of UGX 3,051,259,424.
Where it got stuck
The objection was disallowed in full; mediation failed. At mediation the Revenue Authority changed its method, treating the gap as VAT-exclusive (so VAT was added on top) and adding interest on 'unbilled revenue' that had not been in the original assessment.
What each side argued
The company: the gap came from timing and exchange-rate differences, not hidden sales; with no invoices showing actual supplies, any VAT should be computed as inside the amount (the 18/118 fraction); a new method at mediation was in substance a new assessment it could not object to; interest was capped and partly waived by law; and collecting through the bank during the objection window was unlawful.
The Revenue Authority: revenue in the accounts is stated net of VAT, so the gap was VAT-exclusive; it could correct its position; and the agency notices were lawful once payment was due.
How it was resolved
The Tribunal held that the Revenue Authority could not depart from its objection decision at mediation; new information needed a fresh additional assessment. With no invoices, the gap was treated as VAT-inclusive, giving principal VAT of UGX 2,580,634,340, and the Tribunal criticised assessing on assumption instead of checking with the known, VAT-registered customers. Interest was capped at the principal and partly waived; the 'unbilled revenue' interest was set aside; and the agency notice during the objection period was declared unlawful. The Revenue Authority was ordered to refund UGX 7,707,506,228 plus the deposit, with interest at 2% a month.
What a practitioner takes from it
Reconcile VAT and income tax sales every year, not when the auditors arrive; long contracts recognised by percentage of completion are where gaps grow.
Mediation is without prejudice: watch for a changed method, and object to it as a new assessment.
An agency notice inside the objection window can be challenged, and money taken that way can come back with interest. EY, who acted for the company, drew these points; the figures are as EY reported them.
What could change
A routine VAT-to-income-tax reconciliation at filing, so gaps are explained in the year they arise. Seven years of dispute over figures from 2013 cost both sides; as EY reports the Tribunal observing, everyone loses in the long run.