Tanzania vs Amadeus Global Travel Distribution Limited, March 2026, Court of Appeal, Civil Appeal No. 227 of 2025
Table of Contents
Case Information
Court: Court of Appeal of Tanzania at Dar es Salaam
Case number: Civil Appeal No. 227 of 2025
Citation: Amadeus Global Travel Distribution Limited v. Commissioner General Tanzania Revenue Authority, Civil Appeal No. 227 of 2025, Court of Appeal of Tanzania, 24 March 2026
Applicant: Amadeus Global Travel Distribution Limited
Respondent: Commissioner General, Tanzania Revenue Authority
Jurisdiction: Tanzania
Judgment date: 24 March 2026
Judgment Summary
Amadeus Global Travel Distribution Limited, a branch of a Kenya-resident entity and wholly owned subsidiary of Amadeus ITG of Madrid, Spain, appealed against the decision of the Tax Revenue Appeals Tribunal (TRAT) which upheld a tax assessment issued by the Commissioner General of the Tanzania Revenue Authority (TRA) for the 2015 year of income.
The central dispute concerned whether finance costs of TZS 51,498,294 could be excluded from the appellant's cost pool when calculating arm's length pricing under the Transactional Net Margin Method (TNMM). The appellant argued that its 2015 Transfer Pricing Policy used an operating margin benchmark, which excluded finance costs by definition. The respondent maintained that the TNMM does not permit the exclusion of any class of costs.
The Tax Revenue Appeals Board (TRAB) ruled in favour of the respondent. The TRAT dismissed the subsequent appeal, finding that the appellant had not proved the finance costs were non-attributable to the relevant transaction. The Court of Appeal dismissed the further appeal with costs, holding that grounds 2 and 3 raised questions of fact and evidence evaluation outside its jurisdiction under section 25(2) of the Tax Revenue Appeals Act (TRAA), and that ground 1 disclosed no breach of natural justice.
Background
The appellant, Amadeus Global Travel Distribution Limited, is a branch of a Kenya-resident entity. It is a solely owned subsidiary of Amadeus ITG, situated in Madrid, Spain. The appellant's business is to commercialise the Amadeus GDS system in Tanzania.
The respondent conducted an audit of the appellant's tax affairs for the year 2015. The audit found that the appellant's declared revenue of TZS 1,752,707,542 was lower than the total revenue identified by the audit of TZS 1,806,780,791, resulting in an alleged under-declaration of TZS 54,073,209. This amount comprised finance costs of TZS 51,498,294 plus a 5% mark-up of TZS 2,574,914.
The respondent issued a tax assessment including Corporate Tax of TZS 78,700,422.10, Corporate Tax on Repatriated Income of TZS 50,619,833, and VAT of TZS 13,153,233.00, plus interest and penalties, bringing the total assessment to TZS 494,773,040.00.
The appellant objected to the assessment. The respondent rejected the objection. The appellant appealed to the TRAB, which consolidated the appeals and ruled in favour of the respondent, holding that the TNMM does not abandon any class of costs and that the appellant had not justified the exclusion of finance costs.
The appellant then appealed to the TRAT on six grounds, arguing that the operating margin excludes finance costs, that the TRAB had not correctly applied Tanzanian Transfer Pricing Regulation 9 and the OECD Guidelines, and that the assessment was wrongly based on the inclusion of non-operating expenses. The TRAT dismissed that appeal, holding that while the TNMM can exclude costs not attributable to the transaction, the appellant had failed to prove that the finance costs were non-attributable and had not provided sufficient evidence or justification for the exclusion.
Core Dispute
The core dispute was whether finance costs of TZS 51,498,294 could lawfully be excluded from the appellant's cost pool when computing arm's length pricing under the TNMM for the 2015 year of income.
The appellant contended that its 2015 Transfer Pricing Policy applied the TNMM using an operating margin benchmark, which by its nature excluded finance costs from the cost pool, and that this approach was consistent with the OECD Transfer Pricing Guidelines applicable in 2015. The appellant further argued that the TRAT decided the appeal on a new and unpleaded issue, namely whether the finance costs were functional or service costs, thereby violating natural justice.
The respondent maintained that the TNMM does not permit the exclusion of any class of costs, that the appellant failed to discharge its burden of proving non-attributability, and that the TRAT's analysis was a lawful application of OECD Paragraph 2.99 to the pleaded dispute. The respondent also argued that the appellant's complaints about the OECD Guidelines and the Transfer Pricing Policy were challenges to factual findings and evidence evaluation, over which the Court of Appeal lacked jurisdiction under section 25(2) of the TRAA.
Court Findings
On grounds 2 and 3, the court considered the status of the OECD Transfer Pricing Guidelines in Tanzanian law. Regulation 9(2) of the Income Tax (Transfer Pricing) Regulations, 2014 (GN No. 310 of 2014) provides that the Commissioner may have regard to the OECD Guidelines as updated from time to time, for the purpose of interpreting the Regulations. The court held that this provision does not incorporate the OECD Guidelines as binding statutory law; they are persuasive, interpretative aids subject to the discretion of the Commissioner and appellate bodies.
The court found that the TRAT had in fact referenced and considered the appellant's 2015 Transfer Pricing Policy, as acknowledged in the appellant's own submissions at paragraph 6 and page 10 of the record of appeal. The appellant's complaint therefore transformed from an allegation of non-consideration into a complaint about the weight given to that evidence and the TRAT's preference for the 2017 OECD Guidelines. That was a matter of fact and evidence evaluation.
Pursuant to section 25(2) of the TRAA and the binding precedents in Williamson Diamonds Limited v. Commissioner General TRA (Civil Appeal No. 436 of 2023) and Serengeti Breweries Limited v. Commissioner General TRA (Civil Appeal No. 453 of 2023), the court held that it lacked jurisdiction to re-evaluate the TRAT's factual findings as to which evidence it found most persuasive or which version of the OECD Guidelines it deemed appropriate to apply. The TRAT's choice to apply the 2017 Guidelines was within its discretionary and factual domain. The appellant's attempt to frame this as a point of law was characterised as a challenge to factual appraisal dressed as a point of law.
On ground 1, the court agreed with the respondent that a statement made by one member of the TRAT while giving an opinion could not be taken as an issue raised by the Tribunal forming the basis of its decision. The court further held that the permissibility of including the finance costs was the very heart of the dispute, as evidenced by the appellant's own notice of appeal before the TRAT at page 898 of the record and written submissions at page 994 of the record. The TRAT's analysis of whether the costs were attributable to the appellant's functions was not a new issue but the necessary legal lens through which to resolve the pleaded question of inclusion or exclusion. The TRAT applied the test from OECD Paragraph 2.99, which was already in contention, as referenced in the TRAB's decision at page 969 of the record.
The court distinguished the cases cited by the appellant, Abbas Sherally and Another v. Abdul Sultan Haji Mohamed Fazalboy (Civil Application No. 133 of 2002) and Joel Mwangambako v. Republic (Criminal Appeal No. 516 of 2017), on the basis that those cases concerned scenarios where courts decided matters on a completely new legal issue, whereas here the TRAT operated within the universe of arguments presented. The court found that no breach of natural justice had occurred and that ground 1 lacked merit.
Outcome
The Court of Appeal dismissed the appeal with costs. All three grounds of appeal were rejected. The TRAT's decision upholding the respondent's tax assessments for the 2015 year of income, comprising Corporate Tax of TZS 78,700,422.10, Corporate Tax on Repatriated Income of TZS 50,619,833, and VAT of TZS 13,153,233.00, together with interest and penalties bringing the total to TZS 494,773,040.00, was affirmed.
TP Method Highlighted
The Transactional Net Margin Method (TNMM) was the transfer pricing method used by the appellant in its 2015 Transfer Pricing Policy. The appellant applied an operating margin as the profit level indicator, on the basis that finance costs fall outside the operating margin and should therefore be excluded from the cost pool when computing the arm's length price. The same 5% mark-up was applied by both parties; the dispute was whether finance costs of TZS 51,498,294 should be included in the base to which that mark-up was applied.
The respondent, the TRAB, the TRAT and the Court of Appeal all considered OECD Transfer Pricing Guidelines Paragraph 2.99, which the respondent argued requires the use of fully loaded costs including all direct and indirect costs attributable to the activity. The TRAT and the Court of Appeal held that the appellant had failed to prove that the finance costs were not attributable to its functions and therefore could not be excluded from the cost pool.
Major Issues / Areas of Contention
- Whether finance costs of TZS 51,498,294 could be excluded from the cost pool when computing arm's length pricing under the TNMM, where the appellant's 2015 Transfer Pricing Policy used an operating margin benchmark.
- Whether the OECD Transfer Pricing Guidelines constitute binding statutory law in Tanzania or are merely persuasive interpretative aids under Regulation 9(2) of the Income Tax (Transfer Pricing) Regulations, 2014 (GN No. 310 of 2014).
- Whether the TRAT's application of the 2017 OECD Guidelines rather than the 2015 OECD Guidelines to a 2015 year of income was a point of law reviewable by the Court of Appeal.
- Whether the Court of Appeal had jurisdiction under section 25(2) of the Tax Revenue Appeals Act to re-evaluate the TRAT's factual findings on evidence weighting and the application of the OECD Guidelines.
- Whether the TRAT decided the appeal on an unpleaded issue, namely the classification of finance costs as functional or service costs, thereby breaching the audi alteram partem principle.
- Whether the appellant discharged its burden of proving that the finance costs were not attributable to its functions and therefore excludable under the TNMM.