Send Us Your Article For Publishing. Click Here For More Information.
Last updated on September 14th, 2023 at 05:55 pm
Alternative Dispute Resolution (ADR) has now evolved into a fundamental feature of both the civil and criminal legal systems of Uganda.
Are We A Fit? Discover Partnerships With LegalReports Here.
Several legal instruments such as the Judicature (Mediation Rules) 2013 and Judicature Plea Bargaining Rules 2016 have been enacted to realise this.
ADR is rooted in the judicial principle enshrined in Article 136 (2) (d) of the Constitution of the Republic of Uganda, 1995 which provides that while adjudicating cases of both civil and criminal nature, the courts should promote reconciliation between the parties.
This is the underlying theme of the aforementioned legislative instruments and any other similar legislation.
In Uganda’s tax practice, ADR is undoubtedly a new creature of dispute settlement between taxpayers and the Uganda Revenue Authority (the tax collection body) without having to resort to litigation before the Tax Appeals Tribunal and the higher courts of law.
In particular, ADR was introduced by the enactment of Section 24 (11) of the Tax Procedures Code Act of 2014 in 2021. In addition, under Section 24 (12) the Minister of Finance Planning and Economic Development was empowered to make regulations to provide for ADR for tax purposes.
It should be noted that just like e-tax and EFRIS (electronic fiscal Receipt invoicing system) were introduced in 2010 and 2018 respectively to ease tax administration and increase revenue collection under Uganda’s domestic Revenue mobilization strategy, ADR was introduced for similar reasons.
However, How Effective is it?
Uganda did not have regulations governing ADR until 24/03/2023 when the Tax Procedures Code (Alternative Dispute Resolution Procedure) Regulations (ADR Regulations) were issued.
Regulation 5 of the ADR Regulations provides for the methods of ADR which are conciliation and negotiation. At the time of application for ADR, the taxpayer has to indicate the preferred method.
A taxpayer who is dissatisfied with a tax decision may within 7 days after being served with the tax/objection decision, apply for ADR per Regulation 4(1). A tax decision usually means a tax assessment, determination, decision, or notice.
Become A Partner With LegalReports. Learn More Here.
Unfortunately, Regulation 4(3) and (4) emphasize that the commencement of the ADR procedure does not affect the filing of an application before the Tax Appeals Tribunal or have an effect on the rules and procedures of the Tribunal.
This means that the time within which to lodge an application for review of the Commissioner’s objection/tax decision (30 days from the date of service of the objection decision on the taxpayer) does not stop running because a taxpayer has applied for ADR.
This defeats the benefits of pursuing ADR if a taxpayer is at risk of being out of time to lodge their Application before the Tribunal.
In practice, it is usual for taxpayers to pursue ADR for over 30 days, and by the time it is concluded, they have long lost their right to apply to the Tribunal for review of the objection decision as a result they must apply for an extension of time.
Moreover, it should be noted that grounds for extension of time do not include the pursuit of ADR.
It has been held that the grant of extension of time is discretionary and depends on proof of good cause showing that justice warrants such an extension and that sufficient reason must relate to the inability or failure to take a particular step in time.
These have been said to include; mistake by an advocate, lack of representation, and that there are serious issues to be tried. However, the application will not be granted if there is an inordinate delay in filing it the same.
This, in my view, leaves the taxpayers who are usually unrepresented in an arduous position. To overcome this, tax practitioners usually file the application before the Tribunal and also apply for ADR.
This underscores the whole importance of ADR, as litigation is still a safe bet for taxpayers who are aggrieved by the Commissioner’s tax decisions. These occurrences and risks are similar to those before the enactment of the ADR law. I, however, applaud the policymakers for taking a step in the right direction and my call is thus one for improvement of the existent legal framework and not its condemnation.
On a related note, The ADR regulations do not provide for timelines within which to conclude ADR. This too creates uncertainty in tax administration.
It’s against this background, that I conclude by suggesting that the Ministry of Finance which is the architect of Uganda’s tax policy considers tabling proposals of the ADR Regulations and Tax Procedures Code Act to afford taxpayers a meaningful pursuit of ADR without forfeiting their right to seek recourse to the Tribunal in the event that they are still aggrieved by the objection decision.
This would undoubtedly boost the tax payer’s confidence in ADR and further streamline tax Administration.
Lawyer and Tax Associate at Godena Associates, Advocates and Tax Consultants with a Keen interest in Tax Practice. Email: firstname.lastname@example.org