The Uganda Revenue Authority (URA) has paid UGX 2.4 billion to Canaan Sites Limited after, admitting that it erroneously collected Value Added Tax (VAT) from the real estate company following the sale of unimproved land, which is exempted from tax.
According to a consent settlement order dated March 30th seen by the publication, URA agreed to pay UGX 1.2 billion it illegally collected from the company, UGX 1.2 billion accrued interest on the refund and UGX 36 Million in illegal costs to a 2022 suit, against the tax body before the Tax Appeals Tribunal.
“Whereas the Appellant lodged an Appeal challenging the decision of the Tax Appeals Tribunal delivered vide TAT Application No.228 of 2022, by CONSENT of both parties,……The Appellant (URA) shall remit the full agreed sum of UGX 2.4 billion within 30 days from the date of execution of this consent” the order reads.
Following the issuing of the consent settlement order, the tax body effected the payment of the principal sum and interest, in two transactions last month.
The commissioner legal services and board affairs at URA, Mrs Catherine Donovan Kyokunda, in a letter dated May 21st, confirmed the payment of the money.
“Following the conclusion of the reconciliation exercise, payment of the principal sum was effected on Monday 4th May, 2026 and interest on Friday 8th May, 2026”the letter read.
According to Mr Elvis Ndikuno, managing partner ELDA Advocates, the payment arises from a Tax Appeals Tribunal ruling delivered on the December 19th 2024, in a 2022 case, in which his client Mr Sam Wabasa, the managing Director Canaan Sites Limited, sought payment of UGX 1.7 Billion illegally collected by URA from the period of January 2013 to February 2017.
However URA only accepted to pay back UGX 533 Million it acknowledged, it had illegally collected between January 2013 to October 2015 during which the company wasn’t VAT registered.
In the petition, Canaan Sites challenged URA’s denial to refund UGX 1.7 billion to it. URA only audited and approved to refund UGX 533 million and denied a request for 1.2 billion, arguing that the VAT had been paid by the company’s customer.
However, the tribunal chaired by Ms Proscovia Nambi, alongside two members Ms Christine Katwe and Ms Grace Safi, found that Canaan Sites had provided credible evidence, including witness testimony, and supporting documentation such as newspaper extracts of advertising, the land for sale, sale agreements, bank statements, affirming it did not charge VAT to its customers and instead paid the VAT from its profits.
The tribunal further found that Canaan Site’s consistent pricing of its products before and after VAT registration further supported the claim that the VAT burden was not passed on to the customers. “The Tribunal finds this testimony persuasive and consistent with previous rulings concerning the exemption status of unimproved land” the ruling reads.
The tribunal also found that URA’s retention of the unlawfully collected VAT amounted to unjust enrichment.
“The absence of evidence demonstrating that the VAT was passed on to customers, or that tax invoices were issued, as well as the respondent’s witness testimony that no customer has since claimed the amounts refundable, further fortifies this conclusion” the ruling read.
Additionally, the tribunal found that URA’s collection of VAT on the sale of unimproved land was unlawful and Canaan Sites had demonstrated its entitlement to the refund claimed.
The tribunal further set aside URA’s objection to refund the money and ordered the tax body to refund the claimed funds to Canaan Sites.
“The Respondent is instructed to refund UGX 1,223,526, 463 to the applicant within 30 days of this decision. The responded shall pay interest on the refunded amount at the prescribed rate from the date of collection until the date of payment and the respondents shall bear the costs of the application” the ruling read.
However, in January last year the URA appealed against the decision of the tribunal before the High Court Civil under No.005 of 2025, which both parties agreed to fully settle on a number of terms which included; for URA to withdraw it’s appeal against Canaan Sites Limited.
However, Mr Ndikuno revealed that after serving of the consent settlement order by the High Court, URA paid only UGX 2.4 Billion with the client Canaan Sites Limited still demanding over UGX 500 million, which the tax body admitted to illegally collecting.
