KFC Uganda tax losses have escalated to Shs 16.8 billion since 2018, sparking a contentious legal battle between Kuku Foods Uganda Ltd, the exclusive franchise holder of KFC in Uganda, and the Uganda Revenue Authority (URA). The Tax Appeals Tribunal has dismissed the company’s attempt to block URA from adjusting its declared tax figures, marking a major setback in its bid to shield itself from regulatory revisions.
Tribunal Sides with URA Over Audit Adjustments
In its ruling, the Tribunal chaired by Crystal Kabajwara, alongside members Proscovia R. Nambi and Stella Nyapendi, stated that Kuku Foods had not met all requirements for a temporary injunction. The case arose from a URA audit covering March 2018 to February 2022, which reduced the company’s tax losses from Shs 16.8 billion to Shs 8.3 billion due to undeclared income and disallowed expenses.
While the Tribunal acknowledged a prima facie case, it ruled the company had not proven irreparable damage would occur if URA’s adjustments were enforced.
Company Argued Impact on Valuation and Growth
Kuku Foods argued that the revised tax figures could damage its overall valuation, impede capital mobilization, and weaken its competitive edge in the fast-food sector. However, the Tribunal disagreed, stating that Kuku Foods could still file self-assessed returns pending the case’s resolution.
On the contentious issue of whether the company’s financial statements needed restating, the Tribunal disagreed with Kuku Foods’ position.
No 30% Statutory Deposit Required
Importantly, the Tribunal clarified that Section 15(1) of the Tax Appeals Tribunal Act, which mandates a 30% tax deposit, did not apply in this case since Kuku Foods was not in a tax-paying position at the time the application was filed.
The Tribunal emphasized that granting an injunction would disrupt URA’s statutory mandate, noting:
“It would greatly disadvantage the Respondent if the injunction is granted.”
KFC’s Position in Uganda’s Fast-Food Industry
Kuku Foods Uganda Ltd operates multiple KFC outlets in Kampala and other urban areas. It is part of Kuku Foods East Africa Holdings, which also oversees KFC franchises in Kenya, Rwanda, and Tanzania.
Since entering Uganda in 2012, KFC has grown into a prominent fast-food player, competing with global chains and local brands in a rapidly expanding market for quick service dining.
This tax dispute is KFC Uganda’s most significant legal challenge to date, occurring amid increased government scrutiny of corporate tax compliance.
