Tax Dispute Resolution

Hello Hello A significant tax case was finalized this morning in the High Court: Obie Logistics (Pty) Ltd v. Commissioner of Inland Revenue [NamRA]. In this case, NamRA set off N$1.2 million—a tax refund due to Obie Logistics—against a N$53 million tax liability owed by a separate company, Obie Transport. The justification? Both companies were owned and solely directed by this one guy: Josias Oberholster. NamRA relied on Section 83D of the 2015 Income Tax Act amendments, which allows the authority to recover unpaid taxes from directors. However, there were key legal issues: - The N$53 million tax liability arose in the early 2000s, long before the 2015 amendment was enacted. - Obie Transport is already liquidated, meaning the liability effectively belongs to an entity that no longer exists. The court found that Section 83D cannot be applied retroactively and that NamRA had no legal basis to set off one company’s refund against another company’s liability. As a result, NamRA was ordered to refund the N$1.2 million to Obie Logistics within 60 days. This case raises important questions regarding tax enforcement. While NamRA’s approach may seem logical from a tax collection standpoint, the court has reinforced that setoffs between separate legal entities are not permissible unless explicitly provided for by law. A broader policy concern remains: What mechanisms then exist to prevent individuals from accumulating tax liabilities under one entity, liquidating it, and simply continuing operations under a new company? #TaxLaw #NamRA #TaxSetoffs #CorporateTax #LegalPrecedent

Tax paid “under protest” is NOT acceptance of tax liability. A very important and practical observation from the Bombay HC in the case of NCDEX e Markets Ltd. During the disputed period, the taxpayer had already deposited ~Rs. 30.81 crore under protest. Despite this, an additional 10% pre-deposit was sought for continuation of appeal protection under Section 107(6)(b) of the CGST Act. The Bombay HC has now prima facie held that amounts already deposited under protest should be considered while evaluating compliance with the statutory pre-deposit requirement. Why this matters practically: Businesses often deposit disputed tax amounts • to avoid coercive recovery • to maintain business continuity • to reduce interest exposure • or as an abundant caution during litigation But such payments should not later be treated as admission of liability. The ruling also helps address a genuine business concern - unnecessary cash flow blockage during tax disputes. If substantial disputed tax is already lying with the department, insisting on another 10% deposit may become excessive. A very relevant ruling for ongoing GST litigation and appellate matters. #GST #appeal #litigation #GSTAT #demand #tax

* The Court of Appeal recently delivered a significant judgment in favor of Colombo Fort Land and Building PLC regarding its corporate tax classification under the old IRA 2006. * The cases, C.A. (Tax) 20/2022 and 21/2022, centered on whether the company should be classified as an "Investment Company" or a "Holding Company" * The Inland Revenue Department initially refused the company's tax returns, attempting to tax its dividends as trading profits under Section 3(a) * Tax authorities argued that because dividends comprised over 80% of the company's revenue, they must legally constitute business income * However, the Court ruled that a high volume of income from a specific source does not automatically change its legal classification * A vital distinction was made: investment companies trade shares frequently for short-term profit, while holding companies maintain long-term control * The Court found that the Appellant held its shares for long durations to manage its subsidiary portfolio rather than for systematic trading * Consequently, the company was legally recognized as a Holding Company rather than an Investment Company * The judgment clarified that dividends and interest for such a company must be classified under Section 3(e) as a separate source of income * Crucially, the Court held that these dividends are deemed not to form part of total statutory income under Section 63 of the Act * This ruling reinforces the legislative intent to prevent double taxation at multiple stages of a corporate ownership chain * Ultimately, the Court of Appeal answered the substantive legal questions in favor of the Appellant and allowed both appeals * This decision provides essential clarity for Sri Lankan corporate groups regarding the taxation of inter-company dividends and holding structures The Appellant was represented by Suren Fernando , Attorney at Law and the Respondent was represented by Ms. Chaya Sri Nammuni Deputy Solicitor General (DSG)

📢 𝗧𝗿𝗮𝗻𝘀𝗳𝗲𝗿 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 – 𝗧𝗵𝗲 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗖𝗨𝗣 𝗦𝘁𝗿𝗶𝗸𝗲𝘀 𝗔𝗴𝗮𝗶𝗻! 💡 On 𝟭𝟲 𝗝𝘂𝗻𝗲 𝟮𝟬𝟮𝟱, the 𝗔𝗻𝘁𝘄𝗲𝗿𝗽 𝗖𝗼𝘂𝗿𝘁 𝗼𝗳 𝗙𝗶𝗿𝘀𝘁 𝗜𝗻𝘀𝘁𝗮𝗻𝗰𝗲 ruled in favour of the Belgian Tax Authorities in a transfer pricing case involving 𝗶𝗻𝘁𝗿𝗮𝗴𝗿𝗼𝘂𝗽 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗻𝗴. The dispute revolved around a 𝟱% 𝗳𝗶𝘅𝗲𝗱-𝗿𝗮𝘁𝗲 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿 𝗹𝗼𝗮𝗻 used to finance an acquisition, while the same company had obtained an 𝗲𝘅𝘁𝗲𝗿𝗻𝗮𝗹 𝗯𝗮𝗻𝗸 𝗹𝗼𝗮𝗻 (EURIBOR + 1.75%) from ING on identical terms and the same date. ⚖️ 𝗧𝗵𝗲 𝗰𝗼𝘂𝗿𝘁’𝘀 𝘃𝗶𝗲𝘄: The tax authorities were right to apply the 𝗶𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗖𝗼𝗺𝗽𝗮𝗿𝗮𝗯𝗹𝗲 𝗨𝗻𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝗹𝗲𝗱 𝗣𝗿𝗶𝗰𝗲 (𝗖𝗨𝗣) 𝗺𝗲𝘁𝗵𝗼𝗱 — using the 𝗲𝘅𝘁𝗲𝗿𝗻𝗮𝗹 𝗯𝗮𝗻𝗸 𝗹𝗼𝗮𝗻 𝗮𝘀 𝗮 𝗯𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸 and adjusting it for differences (subordination, fixed vs. floating, and repayment terms). After adjustments, the court held that an 𝗮𝗿𝗺’𝘀 𝗹𝗲𝗻𝗴𝘁𝗵 𝗿𝗮𝘁𝗲 𝗼𝗳 𝟯.𝟯𝟮% 𝘀𝗵𝗼𝘂𝗹𝗱 𝗮𝗽𝗽𝗹𝘆, rejecting the excess 1.68% as a non-deductible expense under Article 55 BITC. 🔍 𝗞𝗲𝘆 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀: – The court confirmed the 𝗽𝗿𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗶𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗖𝗨𝗣 whenever a comparable transaction exists — even if adjustments are necessary. – 𝗔𝗿𝘁𝗶𝗰𝗹𝗲 𝟱𝟱 𝗕𝗜𝗧𝗖 continues to serve as a powerful tool in financial TP cases, reinforcing the taxpayer’s burden of proof to justify that interest is not excessive. – The decision reflects a broader trend: 𝘁𝗵𝗲 𝗕𝗲𝗹𝗴𝗶𝗮𝗻 𝘁𝗮𝘅 𝗮𝘂𝘁𝗵𝗼𝗿𝗶𝘁𝗶𝗲𝘀 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗶𝗻𝗴𝗹𝘆 𝗲𝘅𝗽𝗲𝗰𝘁 𝘁𝗮𝘅𝗽𝗮𝘆𝗲𝗿𝘀 𝘁𝗼 𝘀𝘁𝗮𝗿𝘁 𝘁𝗵𝗲𝗶𝗿 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝗳𝗿𝗼𝗺 𝗶𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗯𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝘀, not external databases. – The judgment also comes with a 𝟭𝟬% 𝘁𝗮𝘅 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲 for incorrect filing, reminding taxpayers that documentation failures can carry immediate financial consequences. 💼 𝗜𝗻 𝗽𝗿𝗮𝗰𝘁𝗶𝗰𝗲: Intragroup financing remains a 𝗵𝗶𝗴𝗵-𝗿𝗶𝘀𝗸 𝗮𝗿𝗲𝗮 in Belgium. A robust, 𝘄𝗲𝗹𝗹-𝗱𝗼𝗰𝘂𝗺𝗲𝗻𝘁𝗲𝗱 𝗖𝗨𝗣 𝗵𝗶𝗲𝗿𝗮𝗿𝗰𝗵𝘆 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀 is essential to withstand audit scrutiny. Even minor deviations between internal and intercompany loans must be justified — otherwise, the tax authorities (and now the courts) will likely 𝗽𝗿𝗶𝗰𝗲 𝗶𝘁 𝗳𝗼𝗿 𝘆𝗼𝘂. Fieldfisher Belgium École Supérieure des Sciences Fiscales (ICHEC-ESSF) #TransferPricing #CUPMethod #Belgium #CorporateTax #ArmLength #Article55 #TaxLaw #MNE #TPDocumentation #IntercompanyFinancing #CourtDecision

We often see clients approach us after receiving unfavorable decisions from the Federal Tax Authority (FTA) at the reconsideration stage of their tax disputes. A common theme in their initial submissions is a heavy reliance on the argument that the taxpayer acted in good faith and had no illicit intent, with the hope that such behavior would warrant cancellation of the imposed tax or administrative penalties. While this may seem like a reasonable approach, it is almost never successful as a core legal argument. The FTA, as a regulatory authority, is mandated to apply the tax legislation strictly—it is neither permitted nor empowered to deviate from the law, even when a taxpayer has clearly acted in good faith. Where the law imposes a tax obligation and that obligation is not met, tax and penalties will apply, regardless of intent. This principle has been explicitly confirmed by the Federal Supreme Court in a tax judgment, where the Court held: “There is no room for invoking good faith to escape a tax obligation that originates from the law.” Accordingly, taxpayers are strongly advised not to rely on good faith or absence of intent as the central argument in tax reconsideration or appeal proceedings. Instead, odds of success in such cases improve with solid legal reasoning, procedural accuracy, and a clear demonstration of non-liability under the law. If you’re facing a tax dispute, seek advice early and build your case on a solid legal foundation—not goodwill alone. Habib Al Mulla and Partners #UAETax #TaxLaw #TaxDisputes #FTA #UAETaxDisputes

In my experience as a Tax Lawyer, this is how you win tax cases in court:- 1. Respect the timelines. Tax dispute resolution is strictly procedural. The law prescribes; - when to object to an assessment; - when to appeal, and - how each step must be taken. Miss a deadline, and even the strongest case will fail. 2. Get the content right. An objection or appeal must do more than express disagreement. It should contain a clear numerical analysis that demonstrates why the assessment is incorrect or excessive. 3. Clearly explain the business model. The nature of the business, how income is generated, what expenses are incurred, and how taxable income is calculated must be easy to understand. Confusion will always leads to over-assessment. 4. Anchor every argument in the law. This is critical. Successful tax disputes rely on statutory provisions, regulations, and decided cases, not personal opinions or sentimental rebuttals. 5. Rely on proper documentation. Financial statements, contracts, bank records, and evidence of actual transactions are what sustain arguments under scrutiny. 6. Engage a tax lawyer early. Many disputes escalate unnecessarily because legal input comes too late in the process. Let the experts help you. 7. Prevention is cheaper than defence. Obtaining sound tax advice upfront is far less costly than defending a tax case. Always ! The core of most tax disputes is; was the assessment raised correctly, lawfully, and fairly. If you are dealing with an assessment, audit, or potential dispute, addressing it properly from the outset can materially change the outcome.

Income tax — capital gains vs. income Tax dispute case history #36 — interesting client matters I've solved over the years. Other practitioners may find these useful. (All 143 are at davidsherman.ca/cases.) My client was a large corporation in the leasing business. It purchased, from a receiver, a large portfolio of equipment that was leased out. Some of the equipment was on "funded leases", where the monthly rental payments had already been sold off to a third party. At the end of the lease period, my client sold the equipment for a substantial gain. Revenue Canada reassessed my client on the basis that the gain on selling the equipment from the funded leases was fully taxable as income, instead of only 3/4 taxable as capital gains. (At the time, before 2000, 3/4 of capital gains were included in income.) The difference in tax amounted to over $200,000. I was retained after the reassessment had already been issued. I filed a Notice of Objection, providing detailed analysis, reference to Revenue Canada policy, and case law to show that the gain should be treated as a capital gain. The Appeals Officer initially disagreed, and I sent her further analysis and submissions in response to her oral comments. Eventually, when she sent me her written reasons for disagreeing with my position, it was clear that, not being legally trained, she did not fully understand the issues and was not able to reply to my detailed submission. I wrote to senior management to insist that Revenue Canada obtain a legal opinion and respond in detail to the points I had raised, indicate what facts the Department accepted as true, and justify its position based on the case law. Six months later, the Appeals Officer called to advise that they had obtained a legal opinion and that I was correct. The objection was allowed and the extra tax eliminated. Problem solved! (1998)

How far can the courts intervene in tax enforcement where the law adopts a strict “pay first, dispute later” rule? The Court of Appeal recently addressed this question in Winning Paramount Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri, reaffirming that judicial oversight remains an important safeguard even within rigid statutory tax frameworks. The court upheld the High Court’s decision to grant a stay of enforcement on additional tax assessments amounting to approximately RM86 million while judicial review proceedings are pending. The dispute arose after the tax authority recharacterised gains from a land disposal which were previously granted a real property gains tax exemption and certificate of clearance as income taxable under the Income Tax Act 1967. Rejecting the Revenue’s appeal, the Court of Appeal found no error in the High Court’s exercise of discretion. The court accepted that immediate enforcement could cause significant and irreparable prejudice to the taxpayer and that a stay was necessary to ensure the judicial review remained meaningful. The ruling is a reminder that while Malaysia’s tax regime prioritises efficient revenue collection, it does not displace the courts’ inherent jurisdiction to intervene where fairness requires it. In complex tax disputes, judicial discretion remains a critical counterbalance namely preserving both fiscal administration and the integrity of the legal process. My colleague Tan Jass Key and I acted the taxpayer in this matter. For details are in the enclosed alert and High Court grounds.

Transfer Pricing Benchmarks Disputes: Update from Ukraine's Courts 🔍 How often do tax authorities challenge benchmarks? Pretty often. That's why staying informed about global TP dispute trends is crucial. 🇺🇦 It's encouraging to see Ukraine as a jurisdiction where in-depth transfer pricing disputes are resolved fairly and transparently. A recent case (Olympex Coupe International LLC vs. tax authorities) showcases this progress. 📊 The taxpayer applied a traditional approach: TNMM with full cost mark-up PLI Broad set of local comparables (14-16 companies) Standard screening criteria (independence, financials, functions) 💼 The tax authorities, aiming to increase the arm's length range, took an interesting approach: Agreed on method and PLI Added criteria/filters: comparable asset size and deep-water port locations (local geography) This resulted in a drastically reduced set (2-3 comparables) and a higher range ⚖️ The court ultimately sided with the taxpayer, finding the tax authorities' additional criteria insufficiently justified. 🎯 Key takeaway: The importance of robust benchmarks cannot be overstated. A well-documented, justifiable approach to selecting comparables is your best defense in transfer pricing disputes. Are your benchmark studies ready for such scrutiny? Let's discuss best practices in the comments!

📌 LEGAL OMISSION BY TAX AUTHORITY AS A GROUND FOR TAX APPEAL In the recent case of Wilbert Basilius Kapinga v Commissioner General, Tanzania Revenue Authority, the Court of Appeal of Tanzania (CAT) delivered a monumental decision with respect to tax disputes settlement in Tanzania. 🔍 Core Issue Whether the Commissioner General’s omission and inordinate delay in deciding an application for waiver of the statutory “pay now, argue later” requirement constitutes an appealable omission under the Tax Administration Act. ⚖️ Background in Brief 1. TRA issued a jeopardy income tax assessment against a non-resident company, copied to the appellant as an alleged representative. 2. The appellant objected and simultaneously applied for a full waiver of payment as required by law. 3. TRA delayed and eventually rejected the waiver out of time, citing lateness. 4. The Tax Revenue Appeals Board (TRAB) and Tribunal (TRAT) declined jurisdiction, holding that only objection decisions are appealable. The matter escalated to the Court of Appeal. 🧠 Key Legal Findings by the Court of Appeal ✅ Omission is Appealable The CAT held that section 53(1) of the Tax Administration Act expressly allows appeals not only against objection decisions, but also against “other decisions or omissions” of the Commissioner General. 👉 Failure to decide a waiver application within the statutory timeline is a legal omission, not a mere administrative delay . ✅ Statutory Timelines Are Mandatory Where the law uses the word “shall”, compliance is not discretionary. An out-of-time decision or prolonged silence breaches the statute and offends principles of public accountability and good administration . ✅ Access to Justice Must Be Protected The Court rejected the narrow interpretation that only finalized objection decisions can be appealed. Such an approach would lock taxpayers out of the dispute resolution system, especially where TRA delays waiver decisions while enforcement powers remain active . ✅ Pan African Energy Cases Distinguished Earlier decisions limiting appealability were fact-specific and could not be used to oust jurisdiction conferred by statute. Jurisdiction flows from Parliament, not precedent. 📈 Why This Case Matters 🔑 Confirms that administrative inaction can ground a tax appeal ⚖️ Reinforces procedural fairness in tax administration 🏛️ Strengthens the jurisdiction of TRAB over omissions by TRA 🚨 Sends a clear message: Discretion ≠ delay without consequence 🧾 Takeaway for Practitioners & Taxpayers If the tax authority fails or delays to decide a waiver application within the prescribed time, that omission is not immune from challenge. It is a standalone, appealable ground of unlocking the doors of tax justice. 💬 A landmark decision for taxpayer rights and administrative accountability in Tanzania’s tax system. #LOREMEInsights #TaxAdministration ##TaxDisputesSettlement #Tanzania