Why embrace alternative dispute resolution

Last year, after an astonishing seven years in court, one of Uganda’s top taxpayers embraced Uganda Revenue Authority’s Alternative Dispute Resolution (ADR). This happened after the company’s owners heard of another case that had been settled the same way.
 So they decided to have a one-on-one with URA through the Tax Appeals Tribunal (TAT) to bring the matter to rest. Within six months, the facts of the case had been presented and settled, attracting a payment of about  Shs60 billion, with URA agreeing to have the penalties and interests waived. 

Over the last 12 months, at least 56 taxpayers have settled contentious tax matters through mediation- one of the methods of Alternative Dispute Resolution (ADR), thus choosing to settle their tax disputes out of court. The mediations were conducted with the assistance of the Tax Appeals Tribunal (TAT). 

In 2018, the TAT Act was amended to make provision for mediation of the cases handled at the Tribunal. The resolved cases were covering all tax heads -: Income tax, Value Added Tax (VAT), Customs, Withholding Tax (WHT) and Import Duty. Many taxpayers who have adopted ADR recognise its value as a time and money saver which has also enabled them to develop a continuous partnership with URA. 
One of the taxpayers, who took advantage of the ADR facility and was able to settle a court case in November 2020, expressed appreciation over the confidential nature that the ADR method provides. 
Without this, the media could have made head-lines from revelations made in court, flushed out cherished secrets or embarrassing facts. However, ADRs are confidential, private and off-record. 

Under ADR, URA and the taxpayer meet in good faith to discuss the issues at hand, arrive at mutual solutions and abide by the outcome of the discussion. The setting can be as formal or informal as the parties want.
URA Commissioner General John Rujoki Musinguzi has advocated for the ADR as one of the key interventions in revenue collection. He acknowledges that ADR is also a solution to the strained relationship between the Authority and many of its stakeholders. In the beginning, many stakeholders were skeptical and thought URA’s new initiative was a dagger in one hand and an olive branch in the other.

However, with 156 new taxpayers now seeking to resolve their tax disputes through ADR and revenue of Shs365b recovered through mediation, the initiative has proven to be a preferred mode for dispute resolution. 
Taxpayers no longer have to spend a burdensome amount of time in court if they can be persuaded to embrace ADR. The average time a case can be completed through litigation is 15-20 months. At the point of completion, the parties would have spent a lot in legal and filing fees, paying witness facilitation and any other related costs before the final sum.  

In 2021, the Tax Procedures Code was amended to include a provision for settling tax disputes through ADR. 
This mirrored the mandatory mediation provided for in the Tax Appeals Tribunal Act and the Judicature Rules governing mediation processes in the Courts of Law.
Application of ADR in tax administration was also adopted by the East African Community Revenue Authorities Commissioner Generals (EARACGs), thus prompting the member countries to come up with the East African Community Alternative Dispute Resolution Framework. Member countries were encouraged to incorporate the ADR framework into their domestic laws, since the same was passed and agreed to by the EARACGs. 

The writer, Noulla Anaso works with URA’s, Public and Corporate Affairs department.