URA, do not frustrate Ugandans’ participation in money economy

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OPINION

By Dr Fabiano Okware

For quite sometime now, the Ugandan business fraternity has been expressing dissatisfaction with the way the tax authority is mounting pressure on its clients in relation to tax obligations.

I would also like to add my voice and express dissatisfaction with the actions of the tax body, particularly in this era of analogue and digital migration in its operations.

A company was opened way back in the year 2000, halted its operations in 2005 and the tax body was duly informed in writing. Later, the company resumed its operations in 2021.

As a fully registered company, it remained compliant and ensured communication flowed between the two parties. However, the company found in its ledger, an abnormal outstanding tax/VAT liability for the period it was not in operation!

Attempts by the management of the company to engage the tax authority officials is taking up to two years to date!

At one point the officials escalated the issue to the ICT department of URA with the hope of reaching its logical conclusion, but to date the company’s ledger has not yet been cleared!

Our attempts to lodge in objections as advised did not bear fruit. It is true, the tax authority has had challenges in its transition from analogue to digital, including lack of competent ICT resource persons to effectively transfer the data, resulting in a “garbage in, garbage out” scenario in some cases, like our company.

The company has not been operating, but finds dumped in, millions of shillings as VAT tax liability!

The authority’s overhaul of its tax ledger system appears not to have been effective, hence frustrating some businesses in meeting their obligations.

The notices of tax assessments, prima facie, appear fraudulent! According to the system, the company’s TIN was deactivated in the year 2009, yet the company was served with notices of assessments for the years 2010, 2011and 2012! In some notices, there is no name of signatory and contact of the serving officer!

This scenario has put the company in an awkward position as it can not be granted a tax clearance certificate (TCC) for seeking support from well-wishers in its drive to engage in the money economy.

To my understanding, having provided all documentation to the tax authority officials about the company on its resumption, any garbage such as mentioned should have been cleaned. Even if it was found to be genuine, and even after such a long period, such assessments should have been treated as bad debts, hence written off! This is good financial management practice!

The organisation should not continue reflecting such amounts in its books of accounts as it will be a recipe for fraud. Most importantly, the analogue and digital transformation provided an avenue for cleaning up ledgers of companies, paving the way for the tax body to build confidence in its operations attracting compliance from the business community.

Furthermore, I also applaud the advice to URA, by my colleague, Edward Kataaha, in his article, “Bring back the tax relief; businesses need reinstatement of interest and penalty waiver”, New Vision, Friday, April 5, 2024. Indeed, businesses are burdened by the system that was supposed to streamline the processes!

How do you reject an application by the small business to access a TCC based on wrong ledger records in your system! The small and medium businesses are going through frustration!

The Government is urging these businesses to engage in productive activities and seek loan support from well-wishers but on condition that they are compliant with the relevant authorities such as URA. These small and medium businesses have a potential to support the country’s economy to attain and sustain the recently declared lower-middle income status according to the UN report! I concur with Kataaha that a flourishing business sector provides fertile ground for creativity, innovation, drives consumer consumption, and creates a positive economic multiplier effect.

Therefore, URA and the Government should not frustrate but constantly direct their effort into supporting the business sector for not only its survival, but growth, development and prosperity, ultimately strengthening the country’s economy.

The writer is an independent business and management consultant fabokware@gmail.com