URA Tower, the headquarters of Uganda’s tax agencyThe High Court has upheld a decision that apartments operated by businessman Sharad Karia at Plot 1A Baker Road in Nakasero are subject to Value Added Tax, finding that the property functions as a serviced apartment and not a simple landlord-tenant arrangement.The judgment, delivered on August 11, 2026 by Hon. Lady Justice Dr. Ginamia Melody Ngwatu, arose from an appeal against a Tax Appeals Tribunal ruling that had dismissed Karia’s challenge to an additional tax assessment of Ugx230,738,527 issued by the Uganda Revenue Authority on May 19, 2022. Karia had objected to the assessment, but URA rejected the objection on March 16, 2023, maintaining that the property generated income attracting VAT. He later took the matter to the tribunal in Application No. 57/2023, but the tribunal ruled in favour of URA, prompting the appeal.Karia’s lawyers argued that the issue before court was whether the property was subject to VAT, saying the tribunal erred in treating the premises as serviced apartments.They submitted that the units were long-term residential apartments and not service apartments, and argued that the tribunal wrongly relied on the “active participation principle,” which they said is not grounded in Ugandan law. They also contended that because the VAT Act does not include a ratio legis from the Hansards, there was no basis to borrow interpretation from foreign law. URA, however, maintained that the tribunal correctly classified the property as serviced apartments and that it fell outside VAT exemption. Counsel for the tax body said the reference to ratio legis did not affect interpretation of the VAT Act and argued that the key question was whether the provision of furnishings, customary household amenities and related services amounted to value addition.In her ruling, Justice Ngwatu said Karia made available facilities including a gym, security, a 24-hour reception desk and, in some cases, internet access. She also noted that in some tenancy agreements he was responsible for paying utilities, while tenants paid a service charge that included VAT.The judge held that the provision of furnishings, amenities, accessories and facilities amounted to making available services under the VAT Act, and said the totality of what was offered could not be compared to a mere landlord-tenant relationship.“In the premises, the property in question amounts to a serviced apartment for the purposes of paragraph 1(f)(v) of the VAT Act,” the judge said, adding: “This ground fails.”She concluded that the appeal succeeded only on one ground and was therefore dismissed on the second, with Karia awarded half the costs of the appeal.The post High Court Upholds URA Assessment: Nakasero Apartments are Subject to VAT, Not Exempt appeared first on Business Focus.