Uganda Tax Appeals Tribunal Rejects URA’s Treatment of VAT/Income‑Tax Variances (Ericsson AB)

The Uganda Tax Appeals Tribunal delivered a taxpayer‑favourable ruling on 29 May 2026 in Ericsson AB v Uganda Revenue Authority, Application No. 060 of 2020, as reported by EY Tax News. The core holding: a numerical mismatch between VAT returns, income‑tax returns and financial statements does not, by itself, prove omitted taxable supplies. URA had to link variances to actual taxable supplies, taxable value and the statutory VAT framework, properly accounting for timing differences and reconciliations. [taxnews.ey.com]

As the MRT Tax commentary explains, Ericsson recognised revenue from long‑term contracts under IFRS (percentage‑of‑completion), whereas VAT arises under the statutory time‑of‑supply rules—so accounting revenue is not a proxy for VAT liability. The Tribunal also viewed with caution URA’s attempt to shift from a VAT‑inclusive to a VAT‑exclusive computation during mediation, holding the proper subject of review was the objection decision, not a new theory. [mrt.tax]

On the numbers, the case highlight records that, because URA had not shown separately invoiced VAT‑exclusive sales, the disputed figures were treated as VAT‑inclusive under section 21(3) of the VAT Act, reducing the VAT principal from about UGX 3.04bn to roughly UGX 2.58bn. The Tribunal capped interest at the principal, set aside interest on unbilled revenue, and held URA acted unlawfully by recovering disputed tax via an agency notice during the live objection period—ordering refunds (reported at UGX 10.76bn) with interest. The decision is significant for businesses with long‑term, milestone or percentage‑of‑completion contracts. [linkedin.com], [taxnews.ey.com]