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)

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.

📌 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

Samsung’s disputes in India aren't one of those isolated cases. They're the remarkable judgments which tax departments will use on every MNC for the next decade. In this case, the tax officer really tried to argue that having Samsung’s Korean managers working in India meant the main Korean company was secretly running a taxable branch here (called a PE). Samsung ultimately won, but the lesson learnt here is that paperwork is your only shield in transfer pricing cases. If the Korean manager's job title or even their email signature suggests they’re running the global show from India, they have  just handed the tax authorities their case! It's all about making sure your documents tell the right, truthful story. Tax disputes over royalties (like Samsung India paying Korea for brand use) will always happen. The argument is whether the price is 'fair' or reported at arms length price. Authorities will always challenge the underlying business model. Are you a low-risk distributor, or a full-fledged manufacturer taking real commercial risk? TP study must move beyond basic calculations. You need to prove the risks, assets, and functions (FAR analysis) of your Indian entity. The future of international taxation isn't just finding loopholes but achieving perfection in documentation and consistency across every single disclosures. #internationaltax #transferpricing #taxrisk #corporategovernance #samsung 

Transfer pricing disputes often reveal the complexities of applying the Arm's Length Principle across diverse industries and jurisdictions. The recent ruling in UK vs Refinitiv and the rulings in these older cases, Glencore Energy UK Ltd v UK, and GE Capital Canada Inc. v Canada, highlight shared themes that resonate across global tax landscapes: 1️⃣ Focus on Intercompany Transactions: All three cases center on scrutinizing intercompany agreements—whether it's intellectual property (Refinitiv), commodities trading (Glencore), or financial guarantees (GE Capital). The courts delved into the terms and comparability of these transactions with third-party dealings. 2️⃣ Interpretation of the Arm’s Length Principle: The application of the arm’s length principle was at the heart of each case. Tax authorities questioned whether the pricing or terms of these transactions reflected those that independent parties would negotiate in similar circumstances. 3️⃣ Role of Economic Substance Over Form: Each case underscored the need to assess economic substance over contractual form. Courts and tax authorities consistently examined whether the actual conduct of the parties aligned with the terms outlined in the agreements. 4️⃣ Reliance on Comparable Data: The use (and challenge) of comparable data was pivotal. Whether determining market rates for IP usage, commodity pricing benchmarks, or credit ratings for financial guarantees, the reliability and selection of comparables were key areas of contention. 5️⃣ Transfer Pricing Documentation and Taxpayer Preparedness: In all cases, the quality of transfer pricing documentation was scrutinized. Taxpayers were required to defend their positions with robust analysis, reinforcing the importance of comprehensive documentation in managing transfer pricing risks. 🎯 These cases serve as reminders for multinationals to prioritise economic substance, select appropriate comparables, and maintain well-supported documentation to withstand scrutiny. The outcomes highlight the growing complexity of tax authority approaches and emphasize the need for proactive transfer pricing risk management. 💡 Let’s keep the discussion going: How can businesses better prepare to defend their transfer pricing policies in today’s rapidly evolving tax environment? #ALP, #ArmsLengthPrinciple, #BurdenOfProof, #ComparabilityData, #DrDanielNErasmus, #EconomicSubstance, #TaxRiskManagement, #TransferPricing, #TransferPricingDocumentation