The Uganda Revenue Authority (URA) has secured a major victory after the Tax Appeals Tribunal upheld a Shs2.002 billion tax assessment against Mini Bakeries Uganda Limited, the manufacturer of Supa Loaf bread.
The ruling, delivered on 21st August 2026, followed a dispute arising from a URA transfer pricing audit covering transactions between Mini Bakeries and related companies between July 2015 and June 2023.
The Tribunal upheld URA’s adjustments relating to royalty payments and interest earned on loans advanced by Mini Bakeries to related companies in Kenya and Tanzania.
At the centre of the dispute was a 2 percent trademark royalty that Mini Bakeries paid to Northgate Holdings Limited (NGHL), a related company based in Mauritius, for the use of the Supa Loaf trademark.
URA challenged the payments, arguing that Northgate Holdings was largely a legal owner of the trademark and had not demonstrated that it performed the functions necessary to justify the royalties.
Mini Bakeries, however, argued that the royalty payments were supported by international market comparisons and maintained that the rates were appropriate.
The Tribunal rejected the company’s position, finding that Mini Bakeries itself carried out significant activities that developed, maintained and enhanced the commercial value of the Supa Loaf brand in Uganda.
These included manufacturing, product quality management, pricing, marketing, customer relationships, market expansion and the assumption of business risks.
The Tribunal consequently upheld URA’s decision to disallow the royalty payments for tax purposes.
URA also challenged interest earned on loans that Mini Bakeries had advanced to related companies in Kenya and Tanzania. The authority argued that the interest rates applied did not adequately reflect the risks associated with unsecured intra-group financing.
The Tribunal agreed with URA, finding that Mini Bakeries had not provided sufficient documentation to demonstrate that the interest rates reflected realistic market conditions or the risks involved.
The Tribunal further rejected Mini Bakeries’ attempt to recover withholding tax and Value Added Tax (VAT) associated with the royalty payments. It ruled that the transfer pricing adjustments did not invalidate the underlying transactions or remove URA’s right to tax income earned by a non-resident under Uganda’s tax laws.
The ruling has been welcomed by URA as an important victory in its efforts to protect Uganda’s tax base and strengthen enforcement of transfer pricing rules.
URA Commissioner General John R. Musinguzi described the decision as “a victory that underscores the authority’s unwavering commitment to protecting Uganda’s tax base.”
He said the outcome demonstrates URA’s tax expertise and legal authority to address complex multinational tax structures and ensure that profits generated within Uganda are appropriately taxed.
The case also sends a strong message to multinational and related companies operating in Uganda that legal ownership of an intellectual property asset or the existence of intra-group transactions alone may not be sufficient to justify deductions for tax purposes.
The Tribunal’s decision reinforces the requirement for related-party transactions, including royalties and financing arrangements, to reflect the substance of the activities undertaken and the conditions that independent parties would reasonably have agreed to.
The Tax Appeals Tribunal ruling is Mini Bakeries Uganda Limited v Uganda Revenue Authority, TAT Application No. 330 of 2025, decided on 21st August 2026.
