Supa loaf bread/Courtesy photoMini Bakeries Uganda Limited, the company behind Supa Loaf, has lost a Shs2,002,240,302 tax dispute after the Tax Appeals Tribunal (TAT) upheld Uganda Revenue Authority’s transfer pricing adjustments.In a ruling delivered on August 21, 2026, the Tribunal dismissed the baker’s challenge to additional income tax and its request for refund of withholding tax (WHT) and VAT.The case arose from a URA transfer pricing audit for the period July 2015 to June 2023.URA had disallowed royalty payments totaling Shs3,787,713,559 that Mini Bakeries paid to Northgate Holdings Limited (NGHL) in Mauritius for use of the “SUPA LOAF” trademark. According to URA, the Mauritius company did not contribute to the commercial success of the brand in Uganda.The tax body also adjusted upwards interest income earned on loans Mini Bakeries advanced to related companies in Kenya and Tanzania, adding Shs2,886,420,174 on grounds that the interest rates were not at arm’s length.Together, the two adjustments resulted in additional tax of Shs2.002 billion.Mini Bakeries, represented by Birungyi Barata & Associates, argued that URA ignored NGHL’s functions and that the loan rates were within Bank of Uganda ranges. URA, represented by Shanta Nalweyiso, insisted the assessment was lawful.The Tribunal, comprising Hon. Crystal Kabajwara, Hon. Stella Nyapendi Chombo and Hon. Rebecca Proscovia Nambi, ruled that Mini Bakeries failed to prove the assessment was excessive as required under Section 19 of the TAT Act.“The taxpayer bears the burden of proof to show that it is more likely than not that the assessment is excessive,” the panel ruled.It faulted the company’s transfer pricing documentation as “lacking in substance,” noting that such documentation is “the first line of defence” against transfer pricing adjustments.The judges said a proper file should show consideration of the arm’s length principle, application of a suitable method, pricing based on reasonable data, and compliance with local regulations.On the substance, the Tribunal found that NGHL did not perform the critical DEMPE functions – Development, Enhancement, Maintenance, Protection and Exploitation – needed to justify royalties.Instead, evidence showed Mini Bakeries was a full-risk entity that set its own marketing strategy, paid for research, advertising, quality improvement and recipe development.“Being the legal owner of a trademark is not enough to justify the compensation received for exploiting a trademark. The trademark owner must be compensated only for the functions it performs,” the Tribunal held.The panel also questioned why Mini Bakeries transferred the Supa Loaf trademark to NGHL for free, then started paying royalties for it, calling it “a transaction that’s not at arm’s length and lacks commercial substance.”URA was found to have conducted “a thorough transfer pricing analysis” in line with OECD Guidelines.On intra-group loans, the Tribunal said unsecured, multi-year US dollar loans to related entities in Kenya and Tanzania required consideration of credit risk, lack of security, duration, currency and jurisdictional risks – which Mini Bakeries did not demonstrate.The Tribunal further dismissed the claim for refund of WHT and VAT, ruling that as a withholding agent, Mini Bakeries had no legal basis to recover tax simply because its deduction had been disallowed. It also found VAT on imported services had already been allowed as a deductible expense.Orders:– Transfer pricing adjustments and Shs2,002,240,302 assessment upheld– Claim for WHT and VAT refund dismissed– Costs awarded to URAThe post How Mini Bakeries Built Supa Loaf Brand in Uganda But Paid Shs3.7Bn to Mauritius Firm – And Lost appeared first on Business Focus.