In a significant legal development, the Court of Appeal has delivered a consequential verdict stemming from an appeal lodged against the Constitutional Court. This ruling, which reverberates through the corridors of legal jurisprudence, pertains to the nullification of Section 2(h) within the Stamp Duty Amendment Act 2000.
The unanimous decision reached on Tuesday by all the Judges on the bench;Egonda-Ntende, Bamugemereire, Mulyagonja, Mugenyi, and Luswata signifies a watershed moment in the ongoing discourse surrounding constitutional interpretation. This verdict not only establishes a pivotal precedent for future legal deliberations but also carries profound implications for the governance landscape of Uganda.
At the heart of this landmark ruling was a petition brought forth by a coalition led by the Uganda Law Society, supported by the Uganda Medical Association, Uganda Institute of Professional Engineers, Institution of Surveyors of Uganda, Institution of Certified Public Accountants of Uganda, Pharmaceutical Society of Uganda, Uganda Veterinary Association, Uganda Society of Architects, Association of Graduate Nurses and Midwives of Uganda, Insurance Training College, Medical Clinical Officers Professionals Uganda Association, Uganda Dental Association, and Uganda Veterinary Paraprofessionals Association of Uganda.
The petitioners argued that Section 2(h) of the Stamp Duty (Amendment) Act, which mandated professional bodies to pay Shs100,000, as per the Stamp Duty (Amendment) Act, 2020, stood in stark inconsistency and contravention of Articles 21(1), 40(2), and 92 of the Constitution of Uganda.
Petitioner’s Argument
The petitioners, comprising bodies established by statute or incorporated by professionals, with the primary aim of fostering professional standards, enhancing ethical service delivery, and fostering camaraderie among members within their respective fields in Uganda, contend as follows:
They assert that the enactment of the Stamp Duty (Amendment) Act, 2020, effective from July 1, 2020, introduced a novel provision in the Second Schedule to the Stamp Duty Act, 2074 (the parent Act), imposing a stamp duty of Shs100,000 (One Hundred Thousand Uganda Shillings only) per annum on every professional license or certificate.
Furthermore, the petitioners highlight that the impetus behind this amendment stemmed from a report by the Parliamentary Committee on Finance, Planning, and Economic Development concerning the Stamp Duty (Amendment) Bill 2000. This report purportedly justified the levy as a means for the Uganda Revenue Authority (URA) to obtain information about professional service providers and to ensure compliance with Section 135(3) of the Income Tax Act. Notably, Section 135 mandates applicants to possess a Tax Identification Number (TIN) before acquiring a license or certificate for professional practice.
Additionally, the petitioners elucidate that members of their respective professions are obliged to renew their licenses or certificates annually, as stipulated by specific laws governing their professions, for which they remit payment. They express grievance over the supplementary levy introduced by the impugned amendment to the Stamp Duty Act, asserting that it discriminates against private practitioners vis-à-vis professionals in identical fields employed by governmental and other public entities, who enjoy exemption from annual license or certificate renewals.
Moreover, they argue that the introduction of the new levy or tax was a circumvention tactic aimed at nullifying previous High Court decisions that favored certain petitioners, effectively reintroducing a tax or charge previously invalidated by the courts. They contend that such action contravenes the principle of separation of powers.
Finally, the petitioners asked the court to impugn provision’s purpose is not regulatory but constitutes an encumbrance on their freedom to engage in professional practice. Consequently, they seek the following declarations and orders: Firstly, a declaration that Section 2(a) of the Stamp Duty (Amendment) Act, 2020, is inconsistent with and contravenes Articles 21(1), 40(2), and 92 of the Constitution of Uganda, rendering it null and void.
The ruling
Justice Irene Mulyagonja, serving as the Lead Judge in the case, ruled favourably on the petition, asserting that it does not align with the exceptions outlined in Article 21(4)(a) and (b) of the Constitution, and Section 2(h) of the Stamp Duty (Amendment) Act, 2020. She found that this provision unfairly discriminates against professionals in private practice, thus violating Articles 21(1) and (3), as well as 152(1) of the Constitution, rendering it void in that regard.
Furthermore, Justice Mulyagonja highlighted the disproportionate burden imposed on professionals in private practice by the section in question. The imposition of a stamp duty of Shs100,000, in addition to other levies collected through their regulatory bodies for the same certificates, was deemed contrary to Article 40(1) of the Constitution, and thus void.
She further stated, “The inclusion of section 2(h) in the Stamps (Amendment) Act, 2020, to facilitate the collection of stamp duty of Shs100,000 as a tax from the petitioners on obtaining a license or certificate to practice is inconsistent with and/or in contravention of Article 92 of the Constitution, and therefore void.”
In a similar vein, Justice Monica Mugenyi ruled that the supplementary tax imposed on the petitioners alongside their professional licenses excessively burdens professionals in the private sector. This imposition infringes upon their right to practice their profession and engage in lawful occupations, trades, or businesses, as guaranteed by Article 40(2) of the Constitution.
According to Martin Asingwire, the Vice President of the Uganda Law Society, professional bodies are now exempt from paying stamp duty before obtaining their licenses. However, they are required to furnish a TIN (Taxpayer Identification Number) to the licensing authorities.
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