KAMPALA — The Tax Appeals Tribunal has dismissed Standard Chartered Bank’s challenge to a Shs1.107 billion withholding tax assessment issued by the Uganda Revenue Authority (URA).
The dispute arose from withholding tax liabilities on transaction and account maintenance fees paid to foreign correspondent banks between January 2016 and 2019.
Standard Chartered maintained foreign nostro accounts with correspondent banks in the United States, Germany, Finland, Canada, the United Kingdom and Switzerland to facilitate international trade and foreign currency settlements.
Following a compliance review, URA assessed the bank for additional withholding tax on charges paid to the overseas institutions. The bank challenged the assessment, arguing that the transaction fees were ultimately borne by its customers and that account maintenance fees qualified as exempt interest under the Income Tax Act.
The bank also disputed URA’s application of Double Taxation Agreements and argued that part of the assessment had been issued outside the legally allowed period.
However, the Tribunal rejected the bank’s arguments and upheld URA’s assessment, ruling that Standard Chartered remained the legal party receiving and paying for the services even where the costs were passed on to customers.
The Tribunal also found that the bank had not provided sufficient evidence to prove that the account maintenance fees qualified for the claimed exemption. It further upheld URA’s treatment of the payments under the applicable Double Taxation Agreements.
On the issue of time limits, the Tribunal rejected the bank’s argument that the assessment was time-barred, finding that information obtained during an earlier refund audit gave URA grounds to conduct a further review.
Commissioner Legal Services and Board Affairs Catherine Donovan said the ruling demonstrates the importance of rigorous audits and close monitoring of financial transactions in identifying taxable services.
She said examining the actual flow of funds helps ensure that local institutions meet their withholding tax obligations on international correspondent banking charges rather than using pass-through arrangements to avoid compliance.
The Tribunal dismissed Standard Chartered’s application and awarded costs to URA, marking a significant victory for the tax authority in its enforcement of withholding tax obligations on cross-border financial transactions.
