Uganda Tax News - Tax Body Accused Of Aiding Evasion of Taxes

This Uganda Tax article that appeared in The Red Pepper, one of Uganda's Daily Newspapers, illustrates how aggressive you need to be when handling tax issues in your business. This Ugandan business has literally not been in operation for over a year because of unclear tax evasion allegations. Enjoy the drama...!

The Directors of Paramount Insurance are accusing Uganda Revenue Authority (URA) of ‘Maliciously’ bulldozing them into closure basing on ‘none existent’ tax claims.

Through their lawyers of Byamugisha Kanduho and Company advocates, they dragged the tax body to the Commercial Court seeking over Shs6bn for business defamation and the revenue lost during the time of closure.

Paramount claims URA suspended them from executing custom bonds on March 23, 2007 and froze their Bank accounts for three years on the pretext of
recovering government revenue of over Shs2.2bn.

The money allegedly arose after Paramount acted as a guarantor and issued custom bonds to a number of clearing agents promising to clear URA taxes if the agents failed. URA claims clearing agents like Osaka Trading Company Ltd, J.W.Z clearing and forwarding Company and Wakwetu Logistics which Paramount stood surety for failed to clear their taxes.

On the contrary Paramount insists the said clearing agents owed no taxes to URA. “The defendant (URA) renews
licenses of clearing agents’ on an annual basis using a nil balance policy.

“There is no way It could have renewed the said agents’
licenses without them having cleared the taxes,” reads part of the Court documents. Paramount further claims in its plaint that URA could allow government officials and politicians to use public funds to settle private tax obligations or to completely evade the taxes and then
turn around to push their tax burden to them (Paramount).

MONEY RETURNED TO PARAMOUNT

They note further that even after Paramount went ahead and verified with the said indebted clearing agents and proved to URA that all had cleared URA insisted that J.W.Z clearing and forwarding had not. Paramount decided to pay Shs3,288,469 that was outstanding for the sake of being allowed to re-operate. “Following consultations with your office, the Company has agreed to pay URA Shs3m in respect of the alleged outstanding taxes owed by J.W.Z as the search for its accountability continues,” Paramount Insurance Managing Director L.N Kiwanuka wrote on December 4, 2009.

To their surprise URA’s Mike J. Chibita who is now a High Court Judge wrote on behalf of the Commissioner General, Allen Kagina, returning the Shs3m to Paramount claiming J.W.Z had already made good their tax obligations.

“We also take this opportunity to return cheque no. 005621 in the amount of Shs3m. We have since established that this amount was cleared way back in 2007. In acknowledgement of the efforts made by Paramount Insurance, we wish therefore to lift the restrictions placed on the Company’s operations. We therefore have no objections for it to start operating in 2010,” Chibita wrote on January 5, 2010. This was however short-lived when URA came up with a new list of indebted clearing agents in March 2009.

It asked Paramount to pay Shs4.9bn owed by the said agents, but Paramount insists the list is an amalgamation of the already cleared list of Shs2.2bn and other entries/agents that have never done business with them. The companies on the list that allegedly never did business with paramount include Atiiba, Excel forwarders, Rolax and Port Link.

URA AUCTIONS GOODS

Paramount claims URA impounded goods from clearing agents like Cargo Star, auctioned them to recover their taxes and afterwards forced Paramount to pay Shs17.5m taxes in respect to those impounded goods. “As tax payers, we were never given back the goods as salvage,” Paramount lawyers stated.

They further allege that URA also wants Paramount to clear Taxes which J.W.Z incurred in 2008 yet this agent never did business with them. In another instance a clearing agent, Osaka Trading, was transporting six trucks of Sugar to Southern Sudan and when they reached Uganda they transferred the goods to five larger trucks in the presence of URA officials. URA now claims one of the six trucks got lost and the onus of proving its whereabouts lies with Paramount Insurance. “URA has been Malicious and with impunity putting our client (Paramount) to task and labour unpaid for to look for information that they already have,” the lawyers claim.

URA RESPONDS
Paramount Insurance Company issued customs bond securities to several clearing agency firms that had outstanding transactions. By June 2007, the outstanding amount was stated to be Shs4,954,615,743.
As Law allows URA in circumstances where one has outstanding transactions - URA called penalty to bond and issued agency notices to various banks to remit all monies due to Paramount Insurance Company to URA. A reconciliation exercise was thereafter embarked on while the company was suspended from issuing customs security bonds. The outstanding amount was said to have reduced to below Shs10,000,000 following this exercise by the January, 5 2010 and hence the suspension was thus lifted.

Paramount Insurance Company filed the above suit on July, 14 2010 claiming loss of business amounting to Shs6,000,000,000 for the three years suspension period . URA filed a Defense justifying the suspension and that it was lifted due to reduced outstandings as a result of a joint reconciliation exercise by both parties. The suit is yet to be heard since it was filed.

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