18 July 2018

Uganda: Museveni Rejects Tax Procedures Act

Photo: PPU
President Museveni addresses Muslims during the Iftar Dinner at State House in Entebbe on Monday.

Parliament — President Museveni has returned the Tax Procedures Amendment Act, 2018 to Parliament and demanded that MPs delete a provision that would have allowed the Uganda Revenue Authority (URA) to charge interest on tax arrears.

In a June 22 letter to Speaker Rebecca Kadaga, Mr Museveni demanded that Section 20(6) of the Act be reconsidered and deleted.

"In accordance with Article 91(3b) of the Constitution, I hereby return the Tax Procedural Amendment Bill 2018 to Parliament. Section 20(6) should be re-considered and deleted," Mr Museveni's letter reads.

In its current form, Section 20(6) provides that where a taxpayer files returns with the Uganda Revenue Authority (URA) and an assessment is done by URA within a year, interest on the money due from the period of assessment shall accrue from the date on which the assessment was conducted.

In his letter, Mr Museveni argues that the current system of paying taxes through self-assessment is effective and should be maintained.

"The current tax system [that] compels taxpayers to pay taxes through self-assessment has been effective. The proposed amendment will further deter URA from charging interest on tax arrears, hence creating revenue leakages," Mr Museveni writes.

The letter adds: "Incorporating it in the Act will encourage non-compliance by the taxpayers as regard to filing the annual tax."

Deputy Speaker Jacob Oulanyah referred the Act to the Finance Committee which will reconsider the clause that the President questioned and re-table the Bill for fresh consideration by Parliament.

In its earlier report that guided MPs into passing the Act, the Finance Committee's report had justified the amendment to Section 20(6) on grounds that it would allow for computation of interest on the money owed to the Authority.

The Finance Committee report also warned that URA has been reneging on its duties of carrying out assessment on returns and confirming the tax to be paid within a year, adding that taxpayers cannot bear the burden of URA's inefficiencies.

"It has been a practice of URA not to conduct an assessment within a year. This has affected taxpayers as URA conducts the assessment after several years of filing returns but imposes interest on the taxpayer from the time of filing returns. The inefficacies of URA should not be visited on innocent taxpayers," the Finance Committee report states.

The Act

In its current form, Section 20(6) of Tax Procedures Amendment Act, 2018 provides that where a taxpayer files returns with the Uganda Revenue Authority (URA) and an assessment is done by URA within a year, interest on the money due from the period of assessment shall accrue from the date on which the assessment was conducted.

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