Brief Facts:
This ruling was in respect of an Application challenging a stamp duty assessment of UGX 9,950,531,938 arising from the determination of whether performance bonds, advance payment bonds, guarantees, and bid bonds are liable to pay stamp duty. The Respondent treated the said instruments as indemnity bonds which attract a stamp duty rate of 1% of the value under item 36 of Schedule 2, whereas the Applicant thought that the said instruments should be treated as bonds which attract a fee of UGX 5,000 and later UGX 10,000 under item 16 of schedule 2 of the Stamp Duty Act.
Issues for Determination:
- What is the stamp duty payable by performance bonds, advance payment bonds, bid bonds and guarantees during the period in dispute?
- Whether the Applicant is liable to pay stamp duty of UGX 9,950,531,398 for the period in dispute?
- What remedies are available to the parties?
Tax Appeals Tribunal Decision:
- Performance bonds, guarantees, and advance payment bonds are indemnity bonds. Thus the stamp duty rate of 1% of the value applies to them and was thus applicable.
- On the other hand, security bids or bid bonds are not indemnity bonds and therefore constitute bonds under item 16 of schedule 2 of the Stamp Duty Act and not item 36, which provides for indemnity bonds.
The Applicant was held liable to pay taxes amounting to UGX 6,364,195,812 to the URA.
This ruling was in respect of an Application challenging a stamp duty assessment of UGX 9,950,531,938 arising from the determination of whether performance bonds, advance payment bonds, guarantees, and bid bonds are liable to pay stamp duty. The Respondent treated the said instruments as indemnity bonds which attract a stamp duty rate of 1% of the value under item 36 of Schedule 2, whereas the Applicant thought that the said instruments should be treated as bonds which attract a fee of UGX 5,000 and later UGX 10,000 under item 16 of schedule 2 of the Stamp Duty Act.
Issues for Determination:
- What is the stamp duty payable by performance bonds, advance payment bonds, bid bonds and guarantees during the period in dispute?
- Whether the Applicant is liable to pay stamp duty of UGX 9,950,531,398 for the period in dispute?
- What remedies are available to the parties?
Tax Appeals Tribunal Decision:
- Performance bonds, guarantees, and advance payment bonds are indemnity bonds. Thus the stamp duty rate of 1% of the value applies to them and was thus applicable.
- On the other hand, security bids or bid bonds are not indemnity bonds and therefore constitute bonds under item 16 of schedule 2 of the Stamp Duty Act and not item 36, which provides for indemnity bonds.
The Applicant was held liable to pay taxes amounting to UGX 6,364,195,812 to the URA.
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