What you need to know:
- With effect from 1 July 2023, the Tax Procedures Code Act, 2014 (TPCA) was amended to restrict the information that may be provided to substantiate a taxpayer’s objection or ADR proceedings, to information that had already been provided by the taxpayer to the URA during the audit.
Generally, a taxpayer who is dissatisfied with a tax decision of the Uganda Revenue Authority (URA) may challenge it through the existing objection and appeals procedures as stipulated under the tax laws.
In this respect, a taxpayer who is dissatisfied with a tax decision may lodge an objection with the Commissioner General of the URA within 45 days after receiving notice of the tax decision. The objection should be filed in prescribed form (currently online) clearly stating the grounds upon which it is made and providing sufficient evidence to support it.
Further, a taxpayer who is dissatisfied with a tax decision of the URA may, within seven days after being served with the tax decision, apply to the Commissioner General for resolution of the dispute using Alternative Dispute Resolution (ADR) procedures. Like the objection application, the ADR application should be in prescribed form and should be substantiated by supporting evidence to the taxpayer’s claim.
Throughout the tax dispute resolution process, the taxpayer is required to substantiate the objection or appeal by providing evidence to support the objection as the burden of proof in tax matters is generally imposed on the taxpayer to prove that the tax decision of the Commissioner was erroneous and thus should be varied or vacated on appeal.
With effect from 1 July 2023, the Tax Procedures Code Act, 2014 (TPCA) was amended to restrict the information that may be provided to substantiate a taxpayer’s objection or ADR proceedings, to information that had already been provided by the taxpayer to the URA during the audit.
However, the above restriction will not apply where the information requested by the URA is more than three years from the date the document was authored or beyond the past three financial years.
The implication of the above amendment is that the tax-payer’s fate may be sealed after a tax assessment or tax decision has been issued at the conclusion of an audit by the URA, if sufficient information was not provided to substantiate the taxpayer’s defence during the audit. There may be minimal value that may be added by tax professionals such as lawyers and tax accountants to challenge the URA’s findings during the objection, appeals or alternative dispute resolution process, if information requests were not complied with during the audit.
The above risks necessitate vigilance on the part of taxpayers who receive URA objection decision notifications through the taxpayer’s e-tax portal account, as well hard copy correspondences that may be delivered at the offices of the taxpayer or their tax advisors.
In order to mitigate the risks of failing to act on information requests by the URA timeously, taxpayers should sensitise their receiving/front desk personnel to send any correspondences from the URA to the appropriate persons within the organisation or tax advisors urgently to ensure quick action. Further, the tax payers may opt to register a group email on the URA portal such that any URA correspondences sent by email are simultaneously dispatched to the appropriate personnel within the organisation for action in real time in order to mitigate the risks of important correspondence being missed due to the email recipient being away on leave or if they have left the organisation and their emails were inadvertently deactivated before a change in contact person has been activated on the tax payer’s URA e-tax portal account.
Further, taxpayers should formally engage with the URA’s personnel handling their tax audits to seek extensions of time to submit required information if they are unable to do so within the stipulated timelines to minimise the risk of an early assessment being issued due to non-responsiveness to information requests by the URA’s audit team.
Lastly, taxpayers ought to ensure any documentation submitted to the URA during the audit is confirmed as received. They should also involve their tax advisors during the audit stage in order to ensure all the evidence required to substantiate their defence is submitted on time as minimal value may be added during the objection and appeals processes given the restrictions imposed by the recently enacted provision of the TPCA.
Authored by Rita L. Zabali Tax manager Ernst & Young Uganda