The Uganda Revenue Authority (URA) has emerged victorious in a high-stakes legal battle after the High Court overturned a Tax Appeals Tribunal ruling that threatened to increase interest claims in a dispute involving rice importers. The decision restores the negotiated interest arrangements between URA and the importers, preventing the tribunal’s approach from creating an additional potential liability estimated at UGX 13.09 billion. The case, Uganda Revenue Authority v David Natweta & 6 Others, High Court Civil Appeal No. 0117 of 2026, marks a significant development in the handling of negotiated tax disputes.
The legal contest revolved around settlement agreements through which URA and the rice importers agreed to resolve their differences over outstanding claims. Under the arrangements, the parties settled on an interest rate of 6% simple interest instead of the 2% compound interest rate associated with certain statutory refund outcomes. The agreements also provided the framework for payment of the importers’ principal claims, which exceeded UGX 14.54 billion. Both sides accepted the terms as part of an effort to bring the disputes to a close without further prolonged litigation.
However, the settlement was later complicated when the Tax Appeals Tribunal set aside the agreed interest arrangements and introduced a different calculation. The change had far-reaching financial implications because the substituted approach increased the potential amount payable in interest. Figures presented in the appeal indicated that the tribunal’s decision could raise the interest exposure by approximately UGX 13.09 billion, prompting URA to challenge the ruling and defend the original agreements.
URA argued that the consent agreements reflected a negotiated compromise that should not have been altered after the parties had agreed to their terms. The authority maintained that the settlement involved concessions from both sides and that the interest provision formed an integral part of the bargain. By changing the agreed rate, the tribunal had effectively modified a central financial condition of the arrangement. The High Court ultimately allowed URA’s appeal and reversed the tribunal’s decision, restoring the position reflected in the negotiated settlements.
One of the key legal questions concerned the relationship between statutory interest provisions and interest terms agreed upon through settlement. The dispute raised the issue of whether the 2% compound interest rate automatically displaced the 6% simple interest arrangement negotiated by the parties. The position upheld by the High Court distinguished between statutory interest applicable to certain refund outcomes and the terms governing a negotiated settlement. This distinction proved central to URA’s challenge against the tribunal’s intervention.
The agreements had been reached on the basis of mutual concessions. URA agreed to abandon contested legal defences and accept the negotiated interest terms, while the rice importers obtained payment of their principal claims. The interest arrangement was therefore part of a broader compromise rather than a separate provision that could be considered without reference to the rest of the agreement. The High Court’s decision reinforces the importance of examining settlements in their entirety when determining the obligations accepted by the parties.
The financial implications of the judgment are substantial. The tribunal’s approach had increased the potential interest exposure by approximately UGX 13.09 billion, making the dispute a significant financial concern for the tax authority. By overturning that decision, the High Court removed the additional exposure arising from the tribunal’s substitution of the agreed terms. However, the estimated figure should be understood as the potential increase associated with the reversed decision, not automatically as a confirmed cash saving of the same amount. The ruling nevertheless strengthens URA’s position in defending the financial terms of its settlement.
The judgment is also an important reminder that negotiated settlements play a critical role in resolving complex tax disputes. When parties reach an agreement and act upon its terms, changing the arrangement can have serious legal and financial consequences. For URA, the successful appeal protects the negotiated outcome and represents a major victory in a dispute involving billions of shillings. More broadly, the decision highlights the need for legal certainty, consistency and respect for settlement agreements in disputes between taxpayers and public institutions.
