Parliament recently introduced a National Tribunal Bill with an intention of giving effect to the government policy for Rationalization of Government Agencies and Public Expenditure (RAPEX).
The Bill proposes to merge the Tax Appeals Tribunal and the Electricity Disputes Tribunal in order to ‘prevent huge costs of administration to the treasury’ that have allegedly been incurred in maintaining the two separate tribunals.
The bill purportedly seeks to establish a national tribunal clothed with the jurisdiction to handle all disputes arising from tax and electricity disputes. This, in my view, is a wrong idea which, if enacted, would go down in history as the worst decision by the 11th parliament.
In the first place, the two tribunals are antithetical and have completely distinct core mandates. Whereas the Tax Appeals Tribunal is mandated with a duty to determine tax-related disputes, the Electricity Disputes Tribunal handles electricity disputes, and these have no correlation with taxation disputes. Merging the two tribunals would be akin to matching apples with oranges merely because both are fruits!
As a specialized quasi-judicial body, the qualifications required for one to become a member of the Tax Appeals Tribunal include adequate knowledge in taxation, finance and accounting as tax disputes arise mainly in those aspects. Merging the two tribunals would mean that for one to become a member, one would be required to have additional qualifications in electricity sector.
Secondly, the Tax Appeals Tribunal derives its mandate from the Constitution of Uganda which envisages that parliament shall make laws to establish specialized tax tribunals for purposes of settling tax disputes. It is upon this background that, in 1997, the Tax Appeals Tribunal was established.
Over the years, the Tax Appeals Tribunal has made significant gains in regard to resolution of taxation disputes through expeditious handling of taxation cases. In the financial year 2022/23, for example, 264 disputes worth Shs 306b were resolved. As at September 30, 2023, a total of 144 disputes worth Shs 185bn had been resolved.
The Tax Appeals Tribunal gives taxpayers a leveled, independent and accessible platform to challenge URA’s decisions and also provides a cushion against the aggressive tax collection methods deployed by URA where taxpayers are allowed to obtain interim orders whilst challenging the quantum of the taxes imposed on them pending outcomes of their cases.
It has also been vital in resolving cross-border high-profile cases. This has saved the country from outbound capital flight by curbing tax evasion and unlawful tax avoidance. In its most celebrated decision, for example, the Tax Appeals Tribunal found a Mauritius-based company, Heritage Oil and Gas Limited, liable to pay taxes to a tune of Shs 1.1 trillion which the company was belaboring to evade.
Merging the two tribunals would water down the efficiency of the Tax Appeals Tribunal and Uganda would inevitably succumb to such tax evasion. The Tax Appeals Tribunal provides a flexible mode of conducting hearings.
This has made it easily accessible to taxpayers since the rigors and rules of evidence are not applied as strictly as in other court proceedings hence encouraging taxpayers of all calibers to confidently challenge the decisions of URA even without representation of lawyers.
The current law provides timelines within which tax disputes are to be resolved. This ensures their expeditious resolution. Consolidating the two tribunals would create unnecessary backlog in dispute resolution. As of July, 2023, it was reported that the value of unresolved commercial cases in Ugandan courts due to case backlog stood at around Shs 8 trillion.
A merger of the two tribunals would exacerbate this anomaly as tax disputes always involve large sums of money. In the end, businesses whose amounts are subject of taxation disputes would suffer a shortage in cashflow which ultimately affects the economic cycle of the country.
The gains of the Tax Appeals Tribunal aside, the proposed National Tribunal Bill is lacking in several material aspects. The proposed bill has no provision for arbitration, mediation or out-of-court settlement of cases. This deprives taxpayers of a chance to resolve their disputes without undergoing rigorous litigation procedures.
In contrast, the Tax Appeals Tribunal has embraced mediation as a tool to resolve tax disputes. In fact, in the financial year of 2022- 2023, 70% of the tax cases filed in the Tax Appeals Tribunal were resolved through mediation. This has enabled expeditious disposal of taxation disputes.
World over, countries in other jurisdictions have tribunals specifically set up to settle taxation disputes. Kenya, for example, has the Kenyan Tax Appeals Tribunal Act.
The United Kingdom has a two-tier Tribunal (Tax) system that handles appeals from decisions of His Majesty’s Revenue Commission, the national tax authority of United Kingdom, whereas South Africa has a Tax Board setup as an administrative tribunal created with a responsibility of resolving tax disputes above one million rand.
Consolidating the two tribunals would, therefore, go against the grand norm of the constitutional provision of establishing a quasi-judicial tribunal solely mandated with handling taxation disputes and would also have catastrophic consequences like case backlog that would discouraging taxpayers from pursuing justice.
The writer is an advocate of the High court.