By Frank Kamuntu
Anti-corruption Court sitting in Kololo on Wednesday sent Directors of Wellex Hardware Ltd, Jigar Chandarana, and two others to prison after being convicted for generating & selling fictitious invoices.
Tax fraud schemes in Uganda are currently taking on many faces as a means to avoid paying taxes. However, URA says is alert and has thus developed a number of strategies to tackle the vice. URA says is heavily relying on intelligence-led operations, and through these, a number of fictitious companies have been netted.
Recently, 7 companies involved in suspicious transactions like invoice trading were netted and these include; Izimba Aaron,44 an accountant and director with Izimba & Company Certified Public Accountants. His actions, according to Stuart Aheebwa, the Supervisor Litigation at URA, caused tax loss worth UGX 2.8 billion as a result of falsifying trade invoices and misusing some of his clients’ Tax Identification Numbers (TINs). Izimba also allegedly changed the passwords of some of his clients’ TINs and transacted on their behalf.
According to the policy, section 62H(c)of the Tax Procedures Code (Amendment) Act, 2022 explains that a taxpayer commits an offense if he or she makes a false or misleading statement in the information return.
Upon conviction, the offense attracts a fine not exceeding 2500 currency points for each day of default or imprisonment for a term not exceeding ten years or both. Each currency point amounts to UGX. 20,000/=.
Meanwhile, these come at a time when URA has already launched an Electronic Receipt Campaign that is intended to empower all taxpayers to demand for receipts at point of purchase.
While unveiling the ‘Mpa Receipt Yange’ campaign at URA headquarters in Kampala last week, John Musinguzi, Commissioner General URA said that the new development is part of Government’s effort towards self-sustenance and reduce on borrowing to fund the budget and will also help businesses improve on their record keeping because the receipts will give an actual picture on the volumes of goods and services sold to the consumers.
Musinguzi said, “This campaign is about cultivating a culture of accountability and a culture of record keeping which are two important ingredients for any economy to succeed and for any economy to develop. We need to have accurate records for us to know the growth of our businesses and consumers to know what we are spending and for what, as you know record keeping hasn’t been part of our culture in Uganda.”
The Commissioner General also revealed that the new campaign will further enable the Authority to give an accountability of the taxes they are collecting because the new electronic system will give URA an update on items being sold by all businesses and in future, there will be no need to file taxes as is the current practice.
Musinguzi also admitted that although the electronic tax payment was launched in 2020, there has been low uptake of the technology which he attributed to the failure by some businesses to purchase the technology required by URA to assess their taxes.
He said, “Some businesses haven’t had money to buy electronic physical devices or if they have the money, they have other things to spend on than invest in technology. So as URA, we are working around this challenge to see if we can have the technology that is easier to deploy without demanding these businesses to spend on the devices which they hadn’t budgeted for.”
Sarah Chelangat, Commissioner Domestic Taxes at URA explained that the electronic tax receipts are intended to end the current practice of demanding for physical receipts and transition to real time transactions that can be monitored by both the Authority and business owners and will make tax collection easier.
She said, “Let us be patriots in this agenda to mobilize revenue, by asking for the E-receipt. Actually the greatest test in patriotism is in paying taxes. Over the years, there has been substantial improvement of VAT collections because of the Electronic system. So far in domestic revenue especially VAT, we have seen VAT grow by about 43%, we can have this one grow to up to 100% if each one of us embraces the E-receipts.”
The latest campaign is part of the cocktail of domestic revenue mobolisation strategies that government has embarked on ton contain tax evasion in Uganda, with one of the strategies including legislation where Parliament in April 2023 approved the proposed amendment to the Tax Procedures Code Bill 2023 giving URA powers to impose a fine of Shs100M or jail term of 10years for individuals or companies who tamper with digital stamps.
