Brief Facts:
The Applicant is a member of the Ernst and Young Network. Ernst and Young EMEIA Services Ltd and Ernst and Young Global Services Ltd procure services centrally for the group to achieve quality standards and service delivery. The group, including the Applicant, is charged for the costs or expenses incurred according to their proportional share of the total services. These services include strategy and implementation services, marketing, quality and risk management, finance, and IT services.
The Applicant also receives due diligence, valuation engagement, audit, and training services from member firms from Kenya, South Africa, and the Middle East, etc.
The Applicant entered into a contract with Ernst and Young (EMEIA) Service Ltd and with Ernst and Young Global Services Ltd. The agreement with E&Y Global Services Ltd. involved the grant to the Applicant and other group members’ rights to licenses.
Issues for Determination:
- Whether the Applicant is liable to pay VAT on imported services as assessed?
- What remedies are available to the parties?
Tax Appeals Tribunal Decision:
The services were provided and procured abroad but were consumed locally. This amounted to an import of services, and the Applicant is liable to pay VAT.
The Applicant was held liable to pay the principal VAT of UGX 2,071,533,406, and the Application was dismissed by the Tax Appeals Tribunal.
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