Tribunal dismisses KFC Uganda’s tax injunction bid
KFC Uganda Tax Case Dismissed as Tribunal Upholds URA’s Ledger Adjustments
Uganda’s Tax Appeals Tribunal has dealt a major blow to Kuku Foods Uganda Ltd, the exclusive franchisee of KFC in Uganda, by dismissing its request to halt the Uganda Revenue Authority (URA) from adjusting its declared tax losses.
The case centered around an audit by URA for the period between March 2018 and February 2022, during which the company’s reported losses were revised from Shs 16.8 billion down to Shs 8.3 billion. URA cited undeclared income and disallowed expenses as justification for the adjustment.
Kuku Foods filed TAT Application No. 287 of 2024, arguing that the revised tax position would negatively impact its business valuation, funding prospects, and market competitiveness. The company requested a temporary injunction to suspend URA’s changes while the main dispute is resolved.
Although the Tribunal acknowledged that Kuku Foods had a valid case, it concluded that the company failed to prove it would suffer irreparable harm. The panel emphasized that URA’s adjustments wouldn’t prevent the company from continuing self-assessed tax filings.
“Granting the injunction would interfere with the execution of URA’s mandate,” the ruling stated.
On a positive note for KFC Uganda, the Tribunal clarified that the statutory 30% deposit required in tax disputes did not apply in this case. Since the company was not in a tax-paying position, no deposit was necessary.
The Tribunal also ruled that URA’s adjustments wouldn’t necessitate restating the company’s financial statements, rejecting Kuku Foods’ argument on that front.
A Landmark Legal Setback for the Fast-Food Giant
Operating in Uganda since 2012, Kuku Foods has grown to become a major player in the quick-service dining scene. It is part of Kuku Foods East Africa Holdings, which also manages KFC franchises in Kenya, Rwanda, and Tanzania.
This legal battle marks the company’s most significant tax challenge in Uganda and comes amid a broader government crackdown on tax compliance across major corporate entities.
As the main case continues, the Tribunal ordered that legal costs will be determined based on the final ruling.
Tax experts say the outcome could influence how multinationals structure their finances in Uganda’s increasingly regulated business environment.
