28 January 2013

Tanzania: Ugandan Company Sues Revenue Authority

Dar es Salaam — Tanzania Revenue Authority (TRA) is alleged to have sold a multimillion dollar Zinunula Corporation, a Ugandan Coffee Processing plant unlawfully at Tsh18m (about$11,441), East African Business Week has been told.

The company, located at Omugakorongo, Karagwe district, Kagera region to the northwest of Tanzania, is now involved in a court battle with TRA in a bid to regain ownership with analysts saying it is a one sided court case.

Speaking exclusively to East African Business Week in Dar es Salaam, the Managing Director of Zinunula Corporation, Mr. Samuel Kizito said he had lost confidence in the state run Tanzania Revenue Authority (TRA) which had ordered the auctioning of four coffee grinding machines, being properties of Kazi Corporation.

Kizito notes "But they later auctioned a newly constructed factory belonging to Zinunula Corporation, a company totally independent from the defunct Kazi Corporation."

"At the time of the sale of the factory, it had not commenced work and had no tax arrears."

Kizito explains that TRA had earlier in 2003 assigned Spider Auction Mart and Court Brokers to auction four pieces of coffee grinding machines belonging to Kazi corporation in order to recover the Tsh12m (about $7,603) tax bill the company owed it.

"I was later surprised to learn from newspapers while on leave in Uganda that it was instead the whole company of Zinunula which was being auctioned for Tsh18m ($11,441) which was contrary to their earlier directives to the court brokers," Kizito told East African Business Week.

When contacted for a comment, TRA's Acting Director for Taxpayers Education Services, Mr. Allan Kiula said he was aware of the case however; he declined to provide further details as he directed our reporters to the TRA's Regional Manager in Kagera.

"I am aware of the case but I request you to contact our Regional Manager in Kagera for further details," Kiula said.

He added that the case was being presided over in Kagera. "Our regional manager in Kagera is in better position to comment than someone from the headquarters," Kiula said when contacted by phone last week.

Kiula added that it will take time for him to answer clearly as he has to go back to the archives to search for the reliable files. "What I can do is to go and look for the files and see the case a move which would take longer to accomplish."

When East African Business Week contacted the Kagera TRA regional office, there was no response from the office line and the mobile phone number for one of the officers in Kagera was also not answered.

The advert to sell by public auction of Kazi's machines appeared in the local Kiswahili tabloid, NIPASHE of 14th September 2003 on page three, the document availed to East African Business Week in Dar es Salaam last week shows.

Kizito stresses that Zinunula (T) Limited had bought land to build the coffee processing factory in Kagera, in early 2001 - a deal that flopped in June 2008 even before it could be commissioned, thus the filing of Land Case no. 1/2008 vs the TRA and Spider Auction Mart and Court Brokers, Amri Amir, and Amri Amir Alhabsy Co Ltd.

Kizito asserts that he had earlier sought to repossess the property and land because it didn't have any financial liabilities to settle with TRA.

He explains that TRA later emerged to claim unpaid taxes occasioned by the previous owner of the company, Kazi Corporation.

The hearing judge R. M. Kibella, ruled that evidence showed Zinunula (T) was not indebted to TRA and that sale by auction of the land and factory machinery by TRA 'was not lawful.'

Kizito said that he has evidence that there were some politicians in the region who have an interest in the said coffee business and the land at large who have an influence on the state run TRA.

He added that such people are making foreign investors lose both the confidence in TRA and interest in future investment in the country.

Putting the case into perspective, Zinunula's Company lawyer Mr. Peter Musoke said that he saw no reason for the sale of the company and the land on which the company was seating because that was neither part of TRA's notice issuance to the broker nor was it a deal between Zinunula and TRA and or Spider Auction Mart and court Brokers.

Mr. Musoke said that the four coffee processing machines that had been directed for auction by TRA in order to recoup the tax balance Kazi Corporation owed the state was more than enough to foot all tax balance that the company had owed TRA.

He said that it was unacceptable for the state run corporation with a great confidence amongst tax payers to auction the multimillion worth dollar company illegally for as low as Tsh18m ($11,441) contrary to its earlier directives to Spider Auction Mart and court Brokers, a firm contracted by TRA.

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