High Court Protects Businesses in Landmark Nile Breweries Case In his ruling, Justice Stephen Mubiru clarified that the 30% requirement applies only to the disputed additional assessment, not to amounts already declared and paid through self-assessment. Thus, Nile Breweries’ earlier tax payments could not be counted toward the injunction condition.

Uganda’s High Court has issued a decision that reshapes the rules of engagement in tax disputes.

The decision gives clarity on the much-contested 30% deposit requirement and reins in the contempt powers of the Tax Appeals Tribunal (TAT).

The case arose when Nile Breweries disputed additional tax assessments issued by the Uganda Revenue Authority (URA) for VAT and excise duty.

Nile Breweries had already paid its self-assessed taxes but challenged URA’s additional demand, which it viewed as unlawful.

While seeking an injunction before the Tax Appeals Tribunal, a condition was imposed that Nile Breweries pays 30% of the tax “in dispute or not in dispute, whichever is greater.”

URA argued that this meant 30% of the additional assessment.

Nile Breweries countered that its prior self-assessment payments were sufficient.

When Nile Breweries declined to pay, URA initiated contempt proceedings before the Tribunal.

The Tribunal agreed with URA, found Nile Breweries and two banks, Stanbic Bank and Standard Chartered Bank, in contempt, and imposed hefty fines.

The high court’s ruling

On appeal, Justice Stephen Mubiru delivered a sharp rebuke to the Tribunal, clarifying that the 30% requirement applies only to the disputed additional assessment, not to amounts already declared and paid through self-assessment.

Nile Breweries’ earlier tax payments could not be counted toward the injunction condition.

Just as significantly, the High Court set aside the contempt findings.

The judge held that the Tribunal had overstepped its jurisdiction by punishing for contempt in a civil context.

The proper consequence of failing to meet the 30% condition was that the injunction should lapse automatically, not trigger punitive fines.

Why it matters

The ruling has two big implications: Clarity on the 30% rule. Taxpayers now have certainty that the deposit condition in section 15 of the Tax Appeals Tribunals Act refers only to the additional assessment in dispute.

This narrows URA’s leverage and ensures taxpayers aren’t penalized twice, first by paying their self-assessment, and again by having it disregarded in injunction proceedings.

Secondly, the ruling limits Tribunal power. By striking down the contempt findings, court reminded the Tribunal that its role is to adjudicate disputes, not to punish parties beyond the authority conferred by law.

Contempt powers, Justice Mubiru stressed, are strictly limited and should not be used to impose civil fines for non-compliance with tax deposit conditions.

Justice Mubiru underscored the purposive approach to interpreting tax statutes: “The obligation to pay 30% tax before resolution applies only after a tax dispute is submitted to the jurisdiction of the Tribunal.

“The quantum in dispute was limited to the amount stated in the additional assessment and not the self-assessment.”

On the misuse of contempt powers, he was equally direct.

“There was no need at all to invoke the contempt power.

“Failure to comply with the 30% deposit requirement … ought to have resulted in the lapsing of the injunction and a possible dismissal of the tax application.”

Court ultimately allowed the appeal in part by setting aside the TAT’s finding of contempt and all associated fines.

However, it upheld that Nile Breweries was obliged to deposit 30% of the additional assessment to sustain an injunction. Each side was ordered to bear part of the costs.

Deeper implications

For businesses, the case offers a crucial safeguard. It ensures that genuine tax disputes can be pursued without the looming threat of disproportionate contempt sanctions.

Companies can now approach the Tribunal with greater confidence that they will not be punished beyond what the law allows.

Yet the judgment also makes clear that injunctive relief comes at a cost. Taxpayers must deposit 30% of the disputed additional assessment.

Payments already made under self-assessment do not count toward this obligation, meaning businesses must budget carefully if they want to challenge URA’s demands.

For URA, the decision both curtails and reinforces its powers.

It loses contempt as a weapon to compel compliance, but it retains the security of knowing that taxpayers must put money on the table to delay enforcement.

In effect, URA’s leverage is narrowed but sharpened. It cannot punish through the Tribunal, but can press ahead with collection if the 30% is not deposited.

For the Tribunal, the ruling is a strong reminder of the boundaries of its jurisdiction.

Its role is to adjudicate disputes, not to punish parties with remedies the law does not expressly provide.

By striking down the contempt findings, court restored the balance between taxpayers’ rights and URA’s enforcement powers.

This emphasizes judicial restraint in a sensitive area of economic life.

For taxpayers more broadly, the ruling is a wake-up call. Once URA issues an additional assessment, 30% of that figure must be paid to obtain injunctive relief.

Failure to comply does not trigger contempt. It simply results in the loss of the injunction, allowing URA to resume enforcement.

This distinction is critical: the sanction is financial, not punitive, and the rules are now clear for all sides.

In short, the case resets the rules of engagement in tax litigation. Disputes can and will go forward, but only if taxpayers are prepared to shoulder part of the disputed bill upfront.

Regional perspective

Uganda is not alone in requiring deposits as a condition for suspending tax collection.

In Kenya, the Tax Procedures Act allows taxpayers to dispute an assessment without an upfront deposit.

The law allows enforcement to continue unless a stay is granted by the TAT, often conditioned on partial payment.

In Tanzania, the Tax Revenue Appeals Act similarly requires payment of the tax not in dispute.

But it also allows tribunals to insist on security for the disputed portion.

Compared to these jurisdictions, Uganda’s fixed 30% deposit rule is more rigid but also more predictable.

The High Court’s clarification in Nile Breweries brings Uganda’s approach closer to regional norms.

It narrows the rule to the disputed assessment only.

This reduces the risk of double payment and aligns the deposit requirement with principles of fairness.

Investor confidence

For investors, the decision may improve Uganda’s appeal as a predictable business environment.

By clarifying that the 30% deposit applies only to disputed assessments and removing the threat of contempt fines, court reduces the uncertainty that often deters foreign capital.

Investors value clear dispute resolution mechanisms.

This case demonstrates that the judiciary is willing to interpret revenue laws in a way that balances state interests and taxpayer protection.

In a region where tax unpredictability is often cited as a risk, the ruling offers a measure of stability.