LEGAL REVIEW: Vivo Energy wins case against URA as court confirms rent paid in respect of leases as an allowable deduction This article focuses on the recent decision of the commercial court following an appeal by Vivo Energy against URA. The key point of contention was whether rent is a capital or revenue expenditure to which the judge found that it is a revenue expenditure and therefore an allowable deduction. Below I analyze and give my opinion on the decision.

For any business, the Income Tax Act [“ITA”] allows the deduction of certain expenses before charging tax. To qualify, these expenses must be of a revenue and not of a capital nature; revenue nature in the sense that the expenses are directly incurred in the production of revenue. However, it is not always easy to determine whether an expense is of a revenue or capital expenditure. This was recently evident in the case of Vivo Energy Uganda Ltd Versus Commissioner General of Uganda Revenue Authority: Civil Appeal No. 1 of 2019 which was decided on the 9th day of March…