MTN Vs URA[TAT No.8 of 2019] – THE DISTINCTION BETWEEN TAXABLE EVENT AND TAX POINT FOR EXCISE DUTY TAXATION.

This is one judgement devoid of any legalistic shenanigans. Clear and concise. I have no #AlternativeFacts! I am just baffled that misreading the law can be stretched by a taxpayer (and their advisors) to the level of absurdity! Well done TAT.

THE CASE: URA assessed MTN shs.24.3 billion as Excise Duty calculated on the basis of the consideration received by when airtime services are provided (point of usage), as opposed to the consideration received when airtime is sold to agents (point of sale). TAT held that excise duty should be paid according to what the parties know as usage of the services and not point of sale, and upheld the assessment of Shs.24,273,771,472.

Quoting from the ruling, this sums up the ratio decidendi:

“When a commission is paid to an agent, the value of the service is not reduced. The commission is factored in the price of the item or service. When there is a discount on a price, in most cases the commission is reduced accordingly. A discount is therefore not synonymous with a commission…the imposition of excise duty on airtime is concerned with the usage of airtime…[the Act provides] that the duty shall be levied on usage charges and access charges by the service providers for the use of cellular services. The Section is self- explanatory. It is clear and unambiguous…”. CASE CLOSED!