KAMPALA – The government has failed to pay taxes it committed to pay on behalf of 67 companies, the just-released audit report has revealed.
Auditor General, John Muwanga in his December 2019 report highlighted that Government had committed to Pay Taxes for Organizations granted tax benefits to a tune of UGX863,238,754,669 through the Ministry of Finance Planning and Economic Development after the 67 companies had been granted Tax holidays for VAT, PAYE, Income Tax and Withholding Tax.
Muwanga noted that the government committed to settling the taxes with URA for the listed companies.
However, verification of the Government Tax arrears as at June 30, 2019, revealed that Government owes URA Shs863.238b in taxes with the arrears having accumulated from as far back as 2005 and whereas the principal tax is Shs569,437,538,931 this has accrued interest to the tune of Shs293,801,215,737 which is 51% of the principal amount owed.
Muwanga said in his report, “I noted that since committing to settle the taxes, the Government has not paid and every other year the taxes keep accumulating interest. The arrears are reflected in the URA revenue 16 statements as collectable, yet the government has not shown any commitment to settle the obligations.”
The audit team also noted that although a waiver has since been granted to taxes owed by the government, URA considers these to be arrears for private companies. Management informed me that under Section 40A. (2) of the Tax Procedures Code (Amendment) Act, 2019, tax arrears were written off.
Failure to budget and account for taxes on donor-funded projects has now been dealt with by exempting donor-funded imports, in accordance with the 5th Schedule to the East African Community (EAC) Customs Management Act, and the deeming provision under the VAT Act. The tax incentives regime was also expanded to cater for facilitation hitherto paid for by the Ministry. I await the implementation of the above initiatives.