The Tax Appeals Tribunal (TAT) has ruled that the National Social Security Fund (NSSF) is liable to pay tax to Uganda Revenue Authority (URA) Ugx 42. 7 billion, ending a seven-year tax dispute between the two government entities.
The tax body received a case from NSSF Uganda seeking to vacate an assessment of UGX 30,521,703,065 as principal tax in respect of contributions made by NSSF members.
The assessment also accrued UGX12,196,875,941 in penal interest. NSSF objected to the assessment and lodged a case with the Tax Appeals Tribunal (TAT), which on 27th March 2020 upheld URA’s principal assessment, but vacated the penal interest.
NSSF objected to the said assessment on grounds that it was entitled to deduct such interest under S. 25(1) of the Income Tax Act.
URA made an objection decision maintaining its position that NSSF was not entitled to make the said deduction. The matter went before the Tax Appeals Tribunal (TAT).
TAT ruled that;
- The contributions made by the members to NSSF do not constitute a debt obligation within the meaning of Sections 25(1) and (2) s of the Income Tax Act.
- The amount referred to as interest under S.23 of the NSSF Act does not qualify as interest for the purposes of Sections 25(1) and 2(kk) of the Income Tax Act.
3. The interest paid by NSSF was not incurred in the production of income included in the gross income.
