DEPARTMENT OF AUDITING & TAXATION
TAKEHOME COURSEWORK II FOR THE DEGREE OF
BACHELOR OF COMMERCE (TAXATION OPTION) OF MAKERERE UNIVERSITY ACADEMIC YEAR 2025/2026.
COURSE NAME: Tax Audit and Investigations
YEAR OF STUDY: III
COURSE CODE: ACC3102
DATE: 21st October 2025
SEMESTER: I
ASSIGNMENT SUBMISSION GUIDELINES
a. All answers must be supported with relevant tax laws and judicial precedents (cases) to substantiate your arguments.
b. The completed group assignment should be submitted via the MUBSEP platform by 6:00 p.m. on 24th October 2025.
c. Each group should comprise a maximum of ten (10) members.
d. The registration details of all group members must appear on the first page of the submission.
e. Submissions must be clearly typed in Times New Roman, font size 12, with 1.5 line spacing, and should not exceed three (3) pages in total.
QUESTION
Sepene Group of Companies Limited is a limited liability company incorporated in Kenya in 2004 with various lines of businesses including manufacturing of disposable cups and plates as well as offering telecommunication services.
Sepene has two subsidiary companies in Uganda which are Debela Manufacturing Limited dealing in the manufacture of disposable cups and plates while Light Limited in the telecommunications sector offering telecom and mobile money services. The two subsidiaries have been operating in the Ugandan market since 2008.
Debela has been manufacturing the disposable cups and plates, sell within Uganda and for export. During the period January 2015 to December 2021, Debela also started selling its disposable cups and plates to its parent company Sepene at a cost-plus markup of 8%. During this period, Sepene went ahead and set up marketing strategies in the other East African regions where it would sell these products at cost-plus markup of 80%.
On 1st January 2024, Uganda Revenue Authority conducted an Administrative Audit of Debela Manufacturing Limited and issued an Administrative Assessment of shs 9,585,928,600 of income tax to Sepene Group of Companies Limited purportedly received on income on group transactions on grounds that Sepene was a resident taxpayer in Uganda during the period of the transactions between 2015 and 2023. This was on the basis that Sepene had an Imports Coordinator employed under Debela Manufacturing Limited who would sit at Debela Offices in Uganda to coordinate the exports to Sepene in Kenya.
On 15th June 2020, Light Limited applied to the Commissioner for a change in the use of Standard Alternative Method in its Input Value Added Tax Apportionment. URA honored the request on 12th July 2020. On 1stSeptember 2020, Light Limited requested the Commissioner to allow them to apply the standard alternative method retrospectively starting January 2016. On 20th September 2020, the Commissioner requested Light Limited to provide details of the Input VAT showing the details of exempt and taxable supplies which Light Limited properly responded to.
However, the Commissioner provided feedback with his classification on 30th September 2020 and requested Light Limited to apportion its network related costs and overhead costs between telecom and mobile money.
Light Limited contested this decision by the Commissioner indicating that such a decision would take it back to the disadvantage it faced prior to requesting to adopting the standard alternative method of apportionment. The back- and-forth investigation led to URA raising an assessment of shs 14,298,650,400 which constituted shs 11,351,405,100 as Principal tax and shs 2,947,245,100 as interest. Light Limited has strongly disputed this position by URA. By December 2021, this contestation was yet to be resolved between Light Limited and URA.
Light Limited contended that as per regulations, they duly applied to the Commissioner and received a written approval. Light Limited indicates that as per the tax laws, they duly applied to the Commissioner who accepted their request to change the VAT Apportionment to use the standard alternative apportionment method while apportioning their Input VAT. Light Limited as well moted that after receiving that approval for the use of the standard alternative method, URA still went ahead to issue them with a new of an alternative method which the law does not provide for. Light Limited feels that URA was not mandated to propose its own other method and that would be erroneous in apportioning VAT, further arguing that URA was only mandated to accept or reject their application.
The Board of Directors of Sepene Group of Companies Limited has approached you as an Expert in Tax Audit & Investigations in profound experience in sustainable and responsible tax compliance.
Required:
(a) Advise the Board on the different types of assessments that are stipulated in the Tax laws of Uganda. (5marks)
(b) Critically evaluate the tax issues arising from Debela Limited transactions with Sepene Group of Companies Limited regarding tax investigations considering any applicable decided cases. (10 marks)
(c) Discuss the issues of contention between Light Limited and URA relating to the VAT disputes and any remedies, if any to resolve the contention. (10 marks)
(d) Analyse the techniques that a Tax Auditor can use to examine the books and records behind a tax return during a tax audit. (5 marks)
(e) Advise the Board of Sepene on their rights and obligations during a tax audit and investigation conducted by URA.