Billions Saved! High Court Deals URA Major Victory in UGX 14.54 Billion Rice Tax Dispute

The Uganda Revenue Authority (URA) has secured a major legal victory after the High Court overturned a Tax Appeals Tribunal (TAT) decision in a dispute involving rice importers, protecting the terms of a negotiated settlement and reversing a decision that had increased potential interest liability by approximately UGX 13.09 billion. The ruling in Uganda Revenue Authority v David Natweta & 6 Others, High Court Civil Appeal No. 0117 of 2026, marks a significant development in the handling of tax disputes and the enforcement of settlement agreements.

At the centre of the dispute were consent agreements between URA and the rice importers, under which the parties agreed to resolve their differences through a negotiated arrangement. The settlement provided for interest at 6 per cent simple interest rather than the 2 per cent compound interest associated with certain statutory refund outcomes. As part of the broader agreement, the importers received payment of more than UGX 14.54 billion in principal claims, bringing the negotiated arrangement into effect.

The agreement was subsequently challenged when the Tax Appeals Tribunal set aside the agreed interest arrangements and substituted a different approach. The tribunal's decision had the effect of changing the financial terms accepted by the parties, significantly increasing the potential interest liability and raising questions about whether negotiated settlements could be altered after the parties had agreed to and acted upon them.

URA challenged the tribunal's decision before the High Court, maintaining that the consent agreements represented a negotiated resolution of the disputes and that their terms should be respected. The authority's position was that the agreed 6 per cent simple interest rate formed part of a wider bargain and could not be isolated from the other concessions made to reach a settlement. The High Court allowed URA's appeal and reversed the tribunal's decision, upholding the negotiated interest arrangement.

A key legal question was whether the statutory 2 per cent compound interest rate could automatically replace the interest terms agreed upon by the parties. The position upheld in the appeal distinguished between statutory interest applicable to certain adjudicated refund outcomes and the terms of a negotiated settlement. The decision underscores the importance of examining the nature and terms of an agreement before imposing a different interest arrangement.

The financial implications are substantial. According to the figures presented in the dispute, the tribunal's decision had increased the potential interest exposure by approximately UGX 13.09 billion. By reversing that decision, the High Court removed the additional exposure arising from the tribunal's substitution of the agreed terms. However, the estimated amount should be understood as the potential additional liability affected by the ruling, rather than automatically treated as a confirmed cash saving of the same amount.

Beyond the immediate financial consequences, the judgment highlights the importance of legal certainty in negotiated settlements. Such agreements are intended to resolve disputes by allowing both parties to make concessions in exchange for an agreed outcome. In this case, URA accepted the negotiated interest arrangement while the importers received payment of their principal claims. Altering one component of that bargain could undermine the basis on which the wider settlement was reached and raise concerns about the reliability of negotiated dispute resolution.

For URA, the ruling represents a significant legal win in its efforts to protect public funds and defend the terms of tax settlements. It also sends an important message to taxpayers and public institutions about the need to honour agreements reached through negotiation, subject to the applicable law. By overturning the tribunal's decision, the High Court has reinforced the principle that settlement terms should not be rewritten without proper legal justification, particularly where the parties have already acted on the agreement.