High Court Deals Major Blow to Rice Importers’ Interest Claims as URA Wins UGX 13 Billion Legal Battle

The Uganda Revenue Authority (URA) has secured a significant legal victory after the High Court overturned a Tax Appeals Tribunal decision that had threatened to increase its financial exposure in a long-running dispute involving rice importers. The ruling in Uganda Revenue Authority v David Natweta & 6 Others, High Court Civil Appeal No. 0117 of 2026, restores the negotiated interest arrangements agreed upon by the parties and reverses a decision that could have increased potential interest liability by approximately UGX 13.09 billion. The judgment marks a major development in the dispute over the terms governing payments to the importers.

At the centre of the legal battle were consent agreements through which URA and the rice importers negotiated a settlement of their differences. Under the agreements, the parties accepted an interest rate of 6% simple interest instead of the 2% compound interest arrangement associated with certain statutory refund outcomes. The agreements formed part of a broader resolution under which the importers received payment of their principal claims, exceeding UGX 14.54 billion. The negotiated terms were intended to settle the disputes without leaving the parties exposed to further disagreements over the financial obligations covered by the settlement.

The dispute took a different turn when the Tax Appeals Tribunal set aside the agreed interest arrangements and substituted a different approach. The change had significant financial implications because compound interest could substantially increase the amount payable over time. According to the figures presented in the appeal, the tribunal’s decision increased the potential interest exposure by approximately UGX 13.09 billion. URA challenged the decision, maintaining that the tribunal had interfered with agreements voluntarily reached by the parties and altered the financial conditions under which the disputes had been resolved.

In allowing URA’s appeal, the High Court reversed the tribunal’s decision, upholding the position that the negotiated settlement terms should not have been replaced in the manner adopted by the tribunal. A central question was whether the statutory 2% compound interest rate automatically displaced the 6% simple interest rate agreed upon by the parties. The position upheld by the court distinguished between statutory interest applicable to certain refund outcomes and the terms of a negotiated settlement. This distinction was crucial to determining whether the original agreements could be altered after the parties had accepted and acted upon them.

The agreements reflected concessions made by both sides to bring the disputes to an end. URA agreed to abandon contested legal defences and accept the negotiated interest arrangement, while the rice importers secured payment of their principal claims. The 6% simple interest rate was therefore not an isolated provision but part of a wider bargain that enabled the parties to resolve their differences. Replacing that term with a different interest calculation risked changing the financial balance of the entire settlement and undermining the basis on which the parties had agreed to move forward.

The ruling also highlights a broader legal principle concerning negotiated settlements: agreements must generally be considered as a whole rather than having individual provisions removed or replaced without a proper legal basis. Once parties have entered into a settlement and acted on its terms, questions about enforcing or changing the agreement must be assessed against the applicable law and the circumstances surrounding the arrangement. In this case, URA’s successful appeal underscores the importance of preserving the agreed terms of a settlement rather than treating them as provisions that can be independently rewritten after the dispute has been resolved.

Financially, the decision is significant for URA because it removes the additional interest exposure arising from the tribunal’s substitution of the negotiated arrangements. The approximately UGX 13.09 billion figure represents the estimated increase in potential interest liability associated with that decision, rather than necessarily constituting a separate cash payment or a confirmed saving of that exact amount. The distinction matters because the financial implications of a court ruling must be separated from the broader value of the underlying claims. Nevertheless, the reversal represents an important outcome for the tax authority in protecting the terms of the settlement and limiting the additional liability created by the tribunal’s approach.

Ultimately, the High Court’s decision gives URA a major advantage in a dispute involving billions of shillings and reinforces the importance of certainty in negotiated tax settlements. For public institutions and taxpayers alike, the case demonstrates why the terms of an agreement must be clearly understood and legally respected once a settlement has been reached. The judgment also sends a significant message about the financial consequences of altering negotiated arrangements after parties have relied on them. For URA, the outcome is a substantial legal victory; for the wider tax system, it highlights the importance of consistency, enforceability and confidence in agreements used to resolve complex financial disputes.