The body that brings together commercial banks in Uganda has rejected a directive by the Uganda Revenue Authority to reveal details of transactions and funds on accounts held in the different banks.
In a letter dated March 16 this year, URA wrote to all the banks in Uganda requesting them to furnish all the information the banks hold on their customers.
According to the request, all the commercial banks are supposed to send records of all the financial records they hold on all Uganda’s banked population.
The details demanded by the tax body include; Account name, Tax Identification Number (TIN), National Identification Number (NIN), address, telephone number and email address.
Banks have also been asked to provide the total cash deposits into the individual accounts for the period January 2016 to December 2017 as well as the total cash withdrawals from that account in the same period.
URA also seeks to know the current balance on the account as of today.
In making the request, URA quotes Section 42 of the Tax Procedure Code Act which states that in an attempt to obtain information or evidence, “the Commissioner may, for the purpose of administering any provision of a tax law, require any person, by notice in writing, whether or not liable for tax to furnish, within the time specified in the notice, any information that may be stated in the notice”.
Section 42 (4) of this same Act goes on to state that furnishing such information has effect “despite any law relating to privilege or the public interest with respect to the giving of information or the production of any record, including in electronic format or any contractual duty of confidentiality”.
However, under their umbrella body Uganda Bankers Association, the commercial banks have defied the order from the tax man until the regulator (Central Bank) pronounces itself on the matter.
In his letter written to URA on March 24 by Wilbrod Humphreys Owor, the Executive Director of the Uganda Bankers’ Association, he says “banks are constrained to act pending directions from the regulator”.
The Bank of Uganda Financial Consumer Protection Guidelines of 2011 compel financial institutions including commercial banks to safeguard the information relating to customers’ accounts.
“A financial services provider shall not disclose any information about a consumer to a third party except where the financial services provider is compelled by law to disclose the information; or the disclosure is made with the express consent of the consumer,” the guidelines state.
They add: “The duty not to disclose any information about the consumer includes information relating to the consumer’s account and any information about the relationship between the financial services provider and the consumer”.
This is a brave move by the Bankers Association. We hope civility will reign and that BoU won’t have it’s arms twisted to require commercial banks to provide this information. Those making these statements should consider tackling the bigger things that the country is dealing with than chasing after monies of the common mwanainchi.
Geoff
The banks are right they need to get directive from the regulator and on the side of URA as a body in my opinion they would compel the customer to produce their bank statements in respective of period required. To leave the bank in safe mode of confidentiality and this creates customers’ satisfaction of total trust.
That will make people to avoid banks therefore hiding large sums of money under their beds.
URA is abusing it’s investigative powers under the TPC Act. Those powers are meant to enable the tax authority in tax collection, to investigate and to obtain “information or evidence” in relation to a case under investigation. Those powers are not carte blanche and cannot be read to imply a blanket authority to invade the privacy of all people or persons, including all persons who are currently certified (by URA) as tax compliant. URA can require a particular individual or taxpayer whom it reasonably suspects to be involved in tax evasion or illegal tax avoidance to furnish more evidence or information. If the taxpayer refuses to comply, then URA can apply all those powers referred to and it will be justified to invade the privacy of that person. URA can also take the taxpayer to court and formally apply for discovery or disclosure orders. Otherwise this move is clearly arbitrary, if not illegal and the banks are, in my opinion, right to defy it.
This move also is not good for the economy. Given the nature of tax (tax is naturally abhorred), any collusion between banks and URA is likely to discourage people from transacting through the bank. Transactions conducted through banks are generally easier to trace and, for purposes of URA, to audit or investigate in case of suspicion of tax evasion. I think URA is lazy and wants to do it once and for all. But if, as a result, people are discouraged from using banks, it’s URA (or the ultimate beneficiaries of our taxes who are not necessarily the taxpayers) that will suffer loss in the long run.