The Uganda Revenue Authority (URA) has won a major legal battle after the High Court overturned a decision by the Tax Appeals Tribunal (TAT) in a dispute involving rice importers.
The ruling in Uganda Revenue Authority v David Natweta & 6 Others, High Court Civil Appeal No. 0117 of 2026, upholds the position that a negotiated settlement providing for 6% simple interest should not have been replaced with a different interest arrangement.
The dispute centred on consent agreements between URA and the rice importers. Under the agreements, the parties settled their differences by agreeing to a 6% simple interest rate instead of the 2% compound interest rate associated with certain statutory refund outcomes.
The agreements formed part of a wider settlement in which the importers received payment of their principal claims.
However, the Tax Appeals Tribunal later set aside the interest arrangements and substituted a different approach.
According to the appeal, this decision increased the potential interest liability by approximately UGX 13.09 billion and undermined the terms on which URA had agreed to settle the disputes.
URA challenged the tribunal’s decision, arguing that the consent agreements represented negotiated settlements between the parties.
The High Court allowed the appeal and reversed the tribunal’s decision, accepting the position that the agreed 6% simple interest rate was a commercial concession made as part of the settlement.
A key issue in the case was whether the statutory 2% compound interest rate automatically applied to the negotiated agreements.
The position upheld by the High Court was that the statutory rate applied to adjudicated refund outcomes and did not automatically replace the terms of a negotiated settlement.
The settlement was based on concessions from both sides. URA agreed to abandon contested legal defences and accept the negotiated interest arrangement, while the rice importers received payment of more than UGX 14.54 billion in principal.
The agreed interest rate was therefore part of the wider bargain that enabled the parties to resolve their disputes.
The High Court’s decision highlights the importance of respecting settlement agreements once parties have agreed to their terms and acted on them.
Where a settlement has been fully performed, one party should not ordinarily be allowed to retain its benefits while rejecting the conditions that made the agreement possible.
The tribunal’s approach had effectively changed an important part of the original agreements.
By replacing the negotiated interest rate, it altered the financial terms of the settlements and increased the amount that could potentially be claimed in interest.
URA’s successful appeal therefore represents an important outcome for the authority, particularly in protecting the financial terms of negotiated tax disputes.
It also reinforces the principle that settlements should be assessed as complete agreements rather than having individual terms removed or replaced without proper legal justification.
The outcome has significant financial implications. Based on the figures provided, the tribunal’s decision had increased potential interest exposure by approximately UGX 13.09 billion.
The reversal removes that additional exposure arising from the tribunal’s substitution, although the exact final financial impact should be distinguished from any broader estimate of savings.
For URA, the ruling is a significant victory in its efforts to protect public revenue while resolving disputes through negotiated agreements.
It also provides an important lesson for taxpayers and public institutions: negotiated settlements depend on the terms accepted by both parties, and those terms cannot simply be rewritten because one side later prefers a different outcome.
