By Spy Uganda
In a landmark decision underscoring Uganda’s commitment to fiscal accountability, the Tax Appeals Tribunal (TAT) has declined to grant interim relief to Kuku Foods Uganda Ltd, the local franchise holder for Kentucky Fried Chicken (KFC), in a contentious tax dispute with the Uganda Revenue Authority (URA).
The ruling, delivered by TAT Chairperson Crystal Kabajwara alongside members Proscovia R. Nambi and Stella Nyapendi, dismissed Kuku Foods’ application seeking to restrain URA from implementing revised assessments to its reported tax losses. The Tribunal found that the fast-food franchisee had not fulfilled all the legal criteria necessary to warrant a temporary injunction.
At the heart of the dispute is a URA audit covering the period from March 2018 to February 2022, during which the revenue authority revised the company’s declared tax losses from UGX 16.8 billion to UGX 8.3 billion. URA based the adjustments on findings of undeclared income and disallowed business expenses—allegations that Kuku Foods has vigorously challenged.
In defense, the company argued that immediate enforcement of the revised figures would cause severe commercial repercussions, including diminished valuation, disrupted capital-raising efforts, and weakened competitiveness in Uganda’s fast-growing quick-service restaurant sector.
While the Tribunal acknowledged that Kuku Foods had presented a prima facie case, it ultimately held that the company failed to demonstrate the risk of irreparable harm—a key standard in granting interim injunctions. The panel also ruled that the URA’s adjustments do not prohibit the franchisee from continuing to file tax returns based on its own self-assessment, pending the final determination of the main application.
Further, the Tribunal rejected Kuku Foods’ claim that the disputed adjustments would compel a restatement of its financial statements—an assertion central to its argument of reputational and financial damage.
Importantly, the Tribunal also clarified the often-misunderstood statutory requirement for a 30% deposit under Section 15(1) of the Tax Appeals Tribunal Act, ruling that the provision does not apply in this case since no definitive tax liability had yet been established. “As the Applicant was not in a tax-paying position, it then follows that there was no tax liability upon which to compute the 30% deposit,” the ruling stated.
Despite the dismissal of the injunction request, the main dispute remains active before the Tribunal. Costs associated with the interim application will be determined following the outcome of the substantive case.
Kuku Foods Uganda Ltd, a subsidiary of Kuku Foods East Africa Holdings, holds exclusive rights to operate KFC in Uganda, managing several high-traffic outlets across Kampala and surrounding urban areas. Since entering the market in 2012, the brand has become a central player in the country’s dynamic fast-food industry, facing competition from both international giants and emerging local brands.
The case marks one of the most high-profile tax disputes involving a multinational franchise in Uganda and arrives at a time when the government is intensifying its push for greater corporate tax compliance and enforcement across all sectors.
While the outcome of the main case remains pending, the ruling sends a strong signal to the business community: regulatory institutions are prepared to assert their mandate, and companies operating in Uganda must be prepared to meet the highest standards of financial transparency and tax discipline.
