Business 1 September 2026 Daily Monitor (Uganda)
URA Loses Shs1 Billion Tax Dispute to Medisell, Tribunal Rules Against Reconciled Differences
The Tax Appeals Tribunal has ruled in favor of Medisell Uganda Limited, blocking the Uganda Revenue Authority (URA) from collecting over Shs1 billion in taxes. The tribunal affirmed that tax assessments cannot solely rely on accounting reconciliation differences without proof of actual undeclared transactions. Source: https://www.monitor.co.ug/uganda/business/finance/ura-loses-over-shs1-billion-in-medisell-tax-dispute-5580488
The Uganda Revenue Authority (URA) has suffered a significant setback, losing a tax dispute valued at over Shs1 billion to Medisell Uganda Limited. The Tax Appeals Tribunal (TAT) delivered a ruling on August 4, 2026, in favor of the medical distributor, preventing the URA from claiming Shs1,006,376,995 in disputed taxes.
This decision is a notable defeat for the URA, which typically boasts a high success rate in tax appeals. The tribunal’s judgment, analyzed by PricewaterhouseCoopers (PwC), reinforced the principle that tax assessments must be based on concrete evidence of undeclared income or taxable supplies, not merely on discrepancies found during accounting reconciliations.
The case originated from a URA audit covering the 2017–2020 period, which initially led to a tax demand of nearly Shs2.5 billion. This included assessments for Corporate Income Tax, Value Added Tax (VAT), Pay As You Earn (PAYE), and Withholding Tax. Although the URA later reduced this demand, Medisell contested the revised amount, escalating the matter to the tribunal.
Medisell argued that the URA’s assessment was fundamentally flawed, built upon bookkeeping errors and accounting anomalies rather than actual unpaid revenue. The company acknowledged some misclassifications, such as staff bonuses, but maintained that no income was deliberately hidden and all taxes due had been paid.
The tribunal largely sided with Medisell, finding that the URA had failed to provide sufficient evidence linking the identified variances to undeclared income or taxable supplies. The court accepted Medisell’s explanations that the differences stemmed from accounting reclassifications, adjustments to imported capital assets, stock changes, and foreign exchange fluctuations.
The ruling emphasizes that accounting differences alone are not automatically taxable. The URA must demonstrate an actual transaction occurred before imposing taxes on computed variances. Similarly, any VAT variance requires proof of a real supply of goods or services. The URA has reportedly appealed this decision.