UGX 533m Refund ‘Disappears’ in URA–Canaan Sites Shs 2.4bn Tax Settlement Drama

tax dispute that began more than a decade ago over Value Added Tax (VAT) on land transactions has cost the Ugandan government at least UGX 2.48 billion in refunds, interest and legal costs, but fresh documents now indicate that an additional UGX 533 million remains unresolved despite being previously approved for refund by the Uganda Revenue Authority (URA).

Lawyers acting for Canaan Sites Ltd, through ELDA Advocates Ltd led by Mr. Ndikuno Elvis Nyanga, say URA has never paid the additional amount, even after allegedly acknowledging that it was wrongly collected from their client.

The dispute, over the land located in Makerere, Kavule, traces back to March 2013 when URA directed Canaan Sites Ltd, a real estate company owned by businessman Sam Wabasa, to charge VAT on the land sales and amend its tax returns accordingly.

The company, which buys large tracts of land, subdivides them and sells plots, challenged the directive, maintaining that it dealt in unimproved land, which is exempt from VAT under Uganda’s tax laws.

Document from the Tribunal show that on March 4, 2016, the company wrote to URA seeking clarification on the classification of “improved” and “unimproved” land, noting that customers were refusing to pay VAT because they considered such land exempt.

Despite the objections, URA proceeded with enforcement, issuing assessments and agency notices to the company’s bankers. Canaan Sites eventually complied under protest and paid the disputed tax from its own resources and profits.

On April 1, 2016, the company sought a private ruling from URA on the issue. In a response dated May 15, 2017, URA confirmed after inspection that the company’s transactions involved subdivision and sale of land without improvements and therefore constituted unimproved land exempt from VAT.

On November 11, 2020, Canaan Sites applied for a refund of UGX 7.5 Billion (1,756,651,736) covering taxes paid between January 2013 and February 2017. Following an audit, URA accepted that UGX 533,125,273 had been wrongly collected and approved a refund for that amount. However, it rejected the balance of UGX 1.223 Billion (1,223,526,463), arguing that the VAT had been borne by customers and therefore refundable only to them.

The company, through its lawyers of ELDA Advocates Ltd, challenged the decision before the Tax Appeals Tribunal (TAT) under Application. During the hearing, director Sam Wabasa testified that the company never passed on VAT to customers, didn’t issue VAT invoices, and instead paid the tax from its own profits after buyers refused to pay it.

Canaan Sites supported its case with newspaper advertisements, sale agreements, VAT returns and bank statements showing consistent pricing before and after URA’s directive to charge VAT, while URA’s own witness conceded that the company dealt in unimproved land, which is VAT exempt, and also acknowledged that there was no evidence of customers who had paid the disputed tax or applied for refunds.

In a ruling delivered in December 2024, the TAT found that URA had unlawfully collected VAT on exempt supplies and failed to prove that customers bore the tax burden, holding that retention of the money amounted to unjust enrichment and ordered URA to refund UGX 1,223,526,463 (1.223Bn), together with interest at a monthly percentage of two (2) and costs.

URA appealed the decision to the High Court in Civil Appeal No. 005 of 2025. However, according to lawyer Ndikuno Elvis Nyanga, the appeal exposed the authority to escalating liability due to statutory interest, with estimates placing potential exposure at over UGX 14 billion if the matter dragged on. Faced with that risk, the parties later entered a consent settlement executed in March and April 2026, under which URA withdrew the appeal and agreed to pay UGX 2,483,383,455, comprising the principal refund of UGX 1,223,526,463 (over 1.2bn), a matching capped interest amount, and UGX 36,330,529 (UGX 36.3 million) in costs.

The settlement was subject to payment within 30 days. In a letter dated May 21, 2026, URA’s Commissioner for Legal Services and Board Affairs, Catherine Donovan Kyokunda, confirmed that following a reconciliation exercise involving 38 amended VAT returns, payment of the principal and interest components had been effected on May 4 and May 8, 2026 respectively.

However, ELDA Advocates maintains that the UGX 533.1 million refund approved earlier during URA’s audit remains unpaid. The law firm argues that this amount was separate from the disputed UGX 1.223 billion that went through litigation and wasn’t covered by the High Court consent settlement.

The firm says it has written several times to URA demanding payment but has not received any substantive response.

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