Summary of ruling
- The Applicant is involved in the importation and assembling of motor vehicles.
- Following a post clearance audit for the period of July 2018 to March 2022, the Respondent raised additional assessments.
- The total disputed tax amounts to Ushs. 5,134,372,701 related to VAT and WHT on imported services.
- The Applicant objected. The objection was disallowed.
- Services provided by ISLA were international transportation services and therefore, the payments are not subject to WHT in line with Section 84 (5) of the Income Tax Act.
- There is no evidence that ISLA provides management services.
- Subject to the 3rd Schedule to the VAT Act, ISLA’s work is primarily international freight and not managerial services and is therefore not subject to VAT.
- WHT assessments amounting to Ushs. 4,393,853,212 in respect of the services provided by ISLA are set aside.
- VAT assessments in respect of sale of receivables are maintained.
- Each party to bear its own costs.
