KAMPALA – Members of Parliament on the Public Accounts Committee (PAC) on Thursday grilled officials from the Privatization Unit over failure to account for Pay As You Earn (PAYE) amounting to Shs6.4 billion.
The money in question accrued from the Auditor General’s report, which indicated that the taxes, which were deducted from staff salaries under the Privatization and Utility Sector Reform Project (Operations Account) increased from Shs4.81 billion at the close of the financial year 2016/2017 to 6.43 billion shillings as at 30th June 2018.
Led by Mr Nandala Mafabi, the Maps demanded to know why the tax, which is deducted at source from staff salaries was not remitted.
In response, Mr Christopher Mugisha, a Senior Accountant in the Finance Ministry Privatization Unit, explained that salaries were not fully paid partially hence the reason not to pay PAYE.
“This payment of PAYE arose as a result of arrears in salary. We had not paid salaries in full. We have paid salaries partially but we did not deduct PAYE for those whose salaries we paid,” Mugisha explained.
However, in response, Kashari North MP Wilberforce Yaguma and Kalungu West MP Joseph Ssewungu said that PAYE is deducted at source whether salaries are partially paid. These were backed up by Nandala.
“Mr Chairman, by law you are supposed to deduct PAYE at the source. Even in the private sector, when you are paying your workers, you deduct PAYE at source and remit it to URA. Failure to deduct PAYE is punishable,” Mr Nandala retorted.
Mugisha said that they have requested for funds to enable settle the liability. However, Nandala insisted that whenever salaries are paid whether partially, PAYE should be deducted automatically.
In the report, Auditor General John Muwanga noted that the continued failure to pay salary related taxes could result in litigation and fines by the Uganda Revenue Authority (URA).
The committee directed the Privatization Unit to present before PAC the payroll of its staff on the next interface with the committee. He also demanded for documents in regard to URA’s action on the matter.
According to the Income Tax Act, an employer has to deduct PAYE and remit it to URA, maintain employees’ records and account for the tax deducted on a monthly basis. Employees are obliged to declare total income from all sources including business income. An employer who fails to comply becomes liable to pay the tax along with any penalties and interests.