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CSO’s demand recovery of tax refunds issued in error

FILE PHOTO: CSBAG ED, Julius Mukunda

Kampala, Uganda  | THE INDEPENDENT | Civil Society Organizations (CSOs) have asked the government to put in place a robust tax arrears refund system to guard against monies paid out to businesses in error by Uganda Revenue Authority (URA).

This call comes after the Auditor General noted anomalies in the refund process whereby they revealed that there are taxpayers who received tax refunds when they still had outstanding tax obligations to the tune of 2 billion Shillings. This was pointed out in his f December 2019 report.

The Income Tax Act requires the Commissioner General of URA to issue a tax refund on grounds that the affected taxpayer doesn’t have any outstanding liability. The refund arises from the 18 percent, Value Added Tax (VAT) charge, levied at every stage of a product’s manufacturing. This is supposed to be refunded when the product is exported.

But the Executive Director of the Civil Society Budget Advocacy Group (CSBAG) Julius Mukunda says that the way it’s currently done denies government the much-needed revenue and also leads to gross revenue shortfalls.

Mukunda says that the money can be refunded if an investigation by the Inspector General of Government (IGG) is done and the said beneficiaries are made to account.

At the annual trade show last year, manufacturers reported to President Museveni that the tax body delays issuing them their money, something the president said affects business because manufacturers find problems with money to invest back when it is being held by URA.

Julius Kapwepwe, the Director of Programmes at Uganda Debt Network said URA should be tapping into new enterprises that are making money but are not contributing as much to tax revenue.

Patrick Batabazi of the policy Think Tank, Center for Budget and Tax Policy says that the economy is expanding but that is not being reflected in the numbers because of anomalies in tax administration such as failure to establish what exactly should be paid in refunds and who should or shouldn’t be paying tax.

He says over the last five years of National Development Plan II, URA has surpassed its target only once in financial year 2018/19.

For him, many taxpayers who haven’t fulfilled their obligations actually got refunds last financial year.

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