The Uganda Revenue Authority (URA) has emerged victorious in a high-stakes legal battle after the High Court overturned a decision by the Tax Appeals Tribunal that threatened to increase interest payments in a dispute involving rice importers. The judgment marks an important development in a case involving billions of shillings and raises questions about the legal force of negotiated settlements between taxpayers and the tax authority.
The dispute arose from agreements between URA and rice importers, including David Natweta and six others, who had sought to resolve disagreements over tax refunds. The parties reached a compromise that provided for interest at a rate of 6% simple interest instead of the 2% compound interest rate associated with certain statutory refund outcomes. The arrangement formed part of a broader settlement intended to bring the disputes to an end.Trouble emerged when the Tax Appeals Tribunal later set aside the agreed interest terms and substituted a different approach.
The decision significantly altered the financial obligations under the original agreements and reportedly exposed URA to an additional interest liability estimated at UGX 13.09 billion. The authority subsequently challenged the tribunal’s decision before the High Court.URA argued that the settlement agreements reflected a deliberate compromise reached by both sides. Under the arrangement, the authority had agreed to settle the disputes on specific terms, while the importers received payment of principal claims exceeding UGX 14.54 billion. URA maintained that changing the interest provisions after the agreements had been implemented would undermine the basis on which the disputes were resolved.In its ruling in Uganda Revenue Authority v David Natweta & 6 Others, High Court Civil Appeal No. 0117 of 2026, the court overturned the tribunal’s decision. The outcome supported URA’s position that the agreed 6% simple interest rate was part of a negotiated settlement and should not automatically be replaced by a statutory interest formula applicable to certain other refund outcomes.
The judgment highlights the importance of respecting the terms of agreements voluntarily reached by parties seeking to avoid prolonged legal disputes. By agreeing to the settlement, URA and the importers accepted specific financial conditions intended to resolve their differences. Altering one of those conditions could change the entire financial balance of the agreement, raising concerns about the reliability of negotiated settlements.The financial implications of the ruling are substantial. The tribunal’s earlier decision had created a potential additional interest exposure estimated at UGX 13.09 billion. By reversing that decision, the High Court removed the basis for that additional exposure arising from the tribunal’s substituted arrangement.
However, the estimated figure should not be confused with a direct cash recovery by URA, since the actual financial effect depends on the terms and implementation of the settlements.For URA, the judgment represents a significant legal win and reinforces the importance of clear, enforceable agreements in resolving tax disputes. It also offers a broader lesson to public institutions and private taxpayers: negotiated settlements are intended to provide certainty, and their terms should not be changed without proper legal justification. The ruling could therefore prove important in future disputes involving tax refunds, contractual compromises and the enforcement of agreements reached outside full judicial determination
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