Former Permanent Secretary (PS) of the Ministry of Health, Dr. Asuman Lukwago has been ordered by the Public Accounts Committee (PAC) to Shs3.8bn as doubtful accountability for Value Added Tax (VAT).
Lukwago, who is the current PS for Ministry of Education is accused of paying money including VAT worth Shs3.8bn to Teruo Ishii, a project manager instead of the contractor, Iwata Chizaki INC Japan that had carried out rehabilitation and supply of equipment in selected hospitals in Western Uganda.
The accusations were raised in the Auditor General’s report for the financial year 2015/2016.
The Auditor General noted that the transaction was in contravention of section (5) of the VAT Act which provides that except as otherwise provided in the Act, the tax payable in the case of a taxable supply is to be paid by the taxable person making the supply.
However, responding to MPs queries on Wednesday, Dr. Lukwago revealed that the decision was taken following several meetings with the contractor who recommended that their payments be made to Ishii, who they gave the powers of attorney.
“We took this decision after realizing the complications involved in the payments following the JAICA Grants which requires that the money be paid in the Bank of Tokyo; the contractor had incurred costs towards clearing tax and demanded for a refund which we agreed that we refund through the project manager who was given the powers of attorney,” Lukwago said.
However, according to Uganda Revenue Authority (URA), VAT amounting to Shs3.8bn has never been received from Ishii who is not VAT registered in Uganda.
Lukwago said that true URA has never received VAT from Ishii but the contractor, Iwata Chizaki acknowledge receiving the money and issued a receipt to the Ministry of Health.
The MPs asked Lukwago to prove whether a due diligence was done to ascertain whether indeed the contractor had paid VAT to URA before going ahead to refund the money to the company.
After serious debate, Lukwago accepted that indeed an error might have been done by paying money to an individual who is not a taxable supplier but committed to help in the recovery of the money.