For many multinational companies operating in Uganda, global purchasing power has always been a strategic advantage. Through group agreements, local subsidiaries can import equipment at significantly lower prices than competitors. On paper, it is smart business.
But a recent High Court ruling has shown that what looks like a discount can quickly turn into a major tax liability.
On April 22, 2026, Justice Stephen Mubiru delivered a landmark judgment in a case between Airtel Uganda and the Uganda Revenue Authority (URA). The dispute centered on a tax assessment of Shs. 1.09 billion, arising from how Airtel valued imported telecommunications equipment.
The court ruled in favor of the URA, overturning an earlier decision by the Tax Appeals Tribunal. The message to corporate Uganda is clear: low prices must be proven with strong documentation, not just stated on an invoice.
The issue began in 2018 when Airtel imported a Broadband Processing Board (BPN2) from Chinese manufacturer ZTE at a declared price of about $1,350 per unit. At the same time, another telecom operator imported the same equipment from the same supplier but declared a price of over $10,000 per unit.
This created a 153 percent price gap for identical equipment. That discrepancy immediately triggered a customs audit.
The URA rejected Airtel’s declared value and instead applied a different valuation method known as “identical goods pricing,” using the competitor’s higher import price as the benchmark for taxation.
Airtel defended its position by relying on its global procurement structure. The company explained that its parent entity negotiates bulk purchase agreements on behalf of multiple subsidiaries across different countries. This allows group companies to access discounted pricing that independent buyers cannot normally achieve.
In simple terms, Airtel argued that it was benefiting from economies of scale, not manipulation of prices.
However, the URA demanded detailed supporting evidence. It was not enough to show invoices and purchase orders. The authority requested the pricing formula behind the discount, the volume thresholds required to unlock it, and proof that such pricing would also be available to an unrelated third-party buyer under similar conditions.
That evidence was never fully provided.
When URA contacted the supplier, ZTE, for clarification, the supplier declined to share the pricing structure, citing commercial confidentiality. This became a turning point in the case.
The court held that confidentiality cannot be used to block a tax investigation. More importantly, the refusal to disclose pricing mechanics weakened the credibility of the declared value. The judge ruled that this gave the URA reasonable grounds to conclude that the transaction may not have been conducted at arm’s length.
In transfer pricing terms, “arm’s length” means the price should reflect what independent parties would agree to in an open market.
Because Airtel could not fully substantiate how the discount was achieved, the court found that the company failed to discharge its burden of proof. As a result, the URA was justified in rejecting the invoice value and using market-based comparisons instead.
The judgment also clarified an important operational point for importers. The court ruled that “identical goods” do not require laboratory testing or physical comparison in a scientific sense. If equipment comes from the same manufacturer, has the same technical specifications, and performs the same function, it is considered identical for customs valuation purposes. Minor differences in packaging or configuration do not change this classification.
For businesses operating in Uganda, the implications are significant.
First, group pricing strategies must now be backed by clear, auditable documentation. Companies must be able to explain not just what price was paid, but how that price was formed.
Second, supplier confidentiality is no longer a safe shield. If a foreign supplier refuses to cooperate with tax authorities, the risk shifts to the local subsidiary. Courts may interpret silence as evidence against the taxpayer.
Third, the burden of proof is firmly on the importer. Once the URA disputes a declared value, it is the company’s responsibility to demonstrate compliance with market pricing standards. If it cannot, the authority is legally permitted to rely on alternative benchmarks, including competitor import data.
The Airtel ruling is not just about one company or one tax bill. It is a broader warning that Uganda’s customs and tax enforcement environment is becoming more data-driven and more aggressive in challenging multinational pricing structures.
For executives, the lesson is simple but critical: a discount that cannot be explained in detail is not a financial advantage. It is a compliance risk waiting to surface at the border.