Lawmakers have raised concern over the failure by Uganda Revenue Authority to collect Shs240.628Bn in Value Added Tax (VAT) on rice imported into Uganda from other East African Community (EAC) countries due to prolonged legal battle playing out in courts of law.
The concerns were highlighted in the report by Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) following the 2021/2022 Auditor General’s report into the financial statement of Uganda Revenue Authority (URA).
According to the Auditor General, whereas the importation of rice grown amongst EAC partner states attracts VAT, some companies are importing rice from a partner state free of VAT, with the said companies capitalizing on a 2016 Court Injunction where URA was temporarily stopped from the collection of VAT on rice imported from the partner states by some companies, while other importers were being charged VAT.
The Auditor General observed that, during the financial year 2021/22, a total of 1,267 companies applied for the court injunction and avoided VAT of UGX.240.628Bn and whereas the temporary injunction was made in 2016, that to date, there has been no ruling which has caused importers to utilise the injunction to avoid VAT leading to loss of revenue to Government of Uganda and unfair competition with the ones denied the VAT exemption.
When asked to explain delays in collecting these taxes, the URA Commissioner General, John Musinguzi informed the Committee that the matter went to court and the Court of Appeal, on 16th September, 2022 agreed with URA and demand notices were promptly issued. However, an appeal was lodged (Civil Appeal No. 27 of 2022) and the importers obtained an interim injunction effective 14th November, which was still subsisting and URA could not levy taxes.
