Ernst & Young v URA: VAT on Imported Services and the UGX 3.48 Billion Assessment

Jurisdiction: Uganda · Decision: Commercial Court, Civil Appeal No. 26 of 2022 · Judgment date: 11 June 2026 · FGL review: September 2026

Uganda's Commercial Court has upheld a VAT assessment of UGX 3,482,492,210 against Ernst & Young Uganda in a dispute over services received from non-resident group entities and other foreign service providers. The decision is important because it gives businesses a current judicial example of how Uganda's imported-services VAT rules can apply to cross-border support, technology and professional-service arrangements.

What the case was about

In Ernst and Young v Uganda Revenue Authority, Civil Appeal No. 26 of 2022, the dispute concerned services obtained from entities outside Uganda, including members of the wider EY network and third-party foreign suppliers. URA treated the services as imported services and assessed VAT for the period January 2014 to June 2018.

EY challenged the treatment, including arguments about where the services were supplied and whether Uganda's VAT framework was sufficiently clear for the transactions in issue. The Commercial Court dismissed the appeal and upheld the position that services supplied from abroad and consumed by a taxable resident in Uganda can constitute imported services liable to VAT.

The legal point finance teams should notice

Uganda's VAT Act imposes VAT on imported services other than exempt services and places the liability on the recipient of the imported service. The practical focus is therefore not simply where a contract was signed, where an invoice originated or where a group company first paid a vendor. A business must examine the actual service, the supplier and the recipient, and whether the service was utilised or consumed in Uganda.

This is why cross-border charges described internally as reimbursements, shared-service costs, technology allocations or group support fees still need a VAT analysis. The label used in the ledger does not by itself determine the tax result.

Withholding tax and VAT are separate questions

The published case record notes that withholding tax had been accounted for on payments to non-resident service providers while VAT had not been declared on the imported services. That does not mean every payment subject to withholding tax must automatically attract imported-services VAT. The two taxes have different charging provisions. It does mean, however, that finance teams should be able to explain why the same cross-border transaction is treated in a particular way under each tax regime.

A good control is to maintain a cross-border tax matrix showing, for each recurring foreign supplier or group recharge, the service description, supplier residence, contract owner, place of use, withholding-tax treatment, imported-services VAT treatment, supporting invoice and payment evidence.

What businesses should review

• Foreign software and technology: licences, cloud services, support, implementation and central IT allocations.
• Group service charges: management, finance, risk, HR, marketing and regional support.
• Professional services: legal, advisory, consulting, due-diligence and specialist technical services.
• Cost recharges: confirm whether a recharge represents a real service received by the Ugandan entity and how the charge was determined.
• Tax consistency: reconcile the VAT, withholding-tax and income-tax treatment rather than reviewing each return in isolation.

Documentation matters as much as the label

For each significant imported service, retain the contract or engagement letter, supplier invoice, description of work performed, allocation methodology where group costs are shared, evidence that the Ugandan entity received or used the service, payment records and the tax analysis applied.

If the transaction is part of an intercompany arrangement, the file should also explain the economic benefit received by the Ugandan entity and how the amount charged was calculated. That documentation can matter for both VAT and income-tax or transfer-pricing reviews.

How this connects to the wider FGL tax library

For the underlying mechanics, see FGL's guide to VAT on imported services in Uganda. Businesses with complex sales and tax reporting should also review the ERP, VAT and income-tax reconciliation guide. The wider Uganda-specific tax library is organised in the Uganda Tax knowledge desk.

Sources

• Ernst and Young v Uganda Revenue Authority, Civil Appeal No. 26 of 2022, [2026] UGCommC 305 (11 June 2026).
• Uganda Revenue Authority — Value Added Tax guidance.
• Sogea Satom v Uganda Revenue Authority, [2026] UGTAT 44 (26 June 2026), another 2026 decision addressing imported services.

FGL note: This article explains the published decision for general professional learning. The tax treatment of a particular cross-border service depends on the current law and the facts of the transaction.