17 December 2012

Rwanda: Revenue Body Denies Plot to Attach Property

Kigali — The Rwanda Revenue Authority (RRA) has denied reports that the body is planning to attach the property of Thomas & Piron, a construction firm in Rwanda, in a bid to recover unpaid taxes to the tune of Rwf 1.1bn (US$ 1.7m).

Thomas & Piron a major construction firm which is at the centre of a payment dispute with Rwanda Social Security Fund (RSSB) concerning the construction of the Grand Pension Plaza building in Kigali is reportedly on the verge of bankruptcy and that it owes billions in unpaid taxes and loans to banks.

A local Newspaper in Rwanda last week reported that RRA was moving to attach several properties belonging to the construction company to recover unpaid taxes amounting to over Rwf 1bn (US$ 1.6m) but officials at the tax body denied the reports in an exclusive interview with East African Business Week.

"We at the Rwanda Revenue Authority are not aware of this (intention to attach Thomas & Piron property)," said RRA Commissioner General Ben Kagarama.

Celestin Pierre Bumbakare, RRA's commissioner of Domestic taxes also denied the reports but said the company owes the tax body some money though he declined revealing how much.

"Normally in such a case we engage the tax payer in talks and in case they can't pay at once we even provide an option of paying in installments, attaching property is not the solution," explained Bumbakare.

Thomas & Piron have been in the news over the past few weeks over a payment dispute with reports alleging that Rwanda Social Security Board has refused to pay the former over Rwf 6bn (US$ 9.5m) for works on the towering pension plaza in Kigali city whose work on completion amounted to over Rwf 20bn (US$ 31.7m) having risen from the initial budget of Rwf 17bn (US$ 27m).

It is reported that back in April this year, Triad Architects, (a Nairobi-based firm that was the supervising consultant of Thomas & Piron on the construction of the Grand pension Plaza building) issued a penultimate certificate to Thomas & Piron for works and material on the building valued at Rwf 7bn (US$ 11m) as money owed by RSSB to the contractor payable after the mandatory one year liability period.

However, later, when Thomas & Piron GL. wrote RSSB an invoice demanding for the sum in question complete with a copy of the penultimate payment certificate attached from the consultant, the client, RSSB declined to pay the money setting off a dispute.

In a press release issued last week, RSSB listed grounds on which the pending payments have not been effected committing to do so once all outstanding issues are ironed out between the client and the contractor.

RSSB (former Social Security Fund of Rwanda) signed a building contract with Thomas and Piron GL to construct the Grand Pension Plaza building at a total cost of Rwf 17.3bn (US$ 27.4m).

To date, the building has been practically completed, pending a number of snags to be corrected for the building to be properly functional though at least 97% of the contract amount equivalent to Rwf 16.8bn (US$ 26.6m) has been paid by RSSB to Thomas & Piron GL.

"The remaining balance shall be paid after the final account is agreed upon by both parties," explained part of the release.

According to Triad (the consulting firm) though the original total sum to be spent on the Grand Pension Plaza construction was Rwf 17.3bn (US$ 27.4m) the real figure at the end of the works had risen to Rwf 22.7bn (US$ 36m) above initial cost by more than Rwf 5.4 bn (US$ 8.6m) hence the resultant balance.

RSSB blames the contractor for the additional monies but the contractor argues that the client had breached the contract.

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