The Uganda Revenue Authority(URA) has revealed that over Shs. 1 trillion is locked up in tax related court cases.
This was revealed by Patience Rubagumya, the Commissioner Legal Services and Board Affairs at URA, during the 4th episode of the ‘URA’s e-Bomba Ya Business Summit’ held at the tax body’s Headquarters in Kampala.
This episode focused on “Alternative Dispute Resolution: The Role in Domestic Revenue Mobilization”
Rubagumya noted that most of the cases are filed by tax payers who do not agree with URA’s tax assessment.
She noted that over 300 tax cases valued at Shs. 1 trillion, are in the Tax Appeals, Tribunal, High Court and Court of Appeal.
Rubagumya noted that, in the FY2020/21, 259 cases were filed, and out of the 85 that were concluded, 65 were ruled in favor of URA and 20 in taxpayers’ favor.
However, Rubagumya advised tax payers to take on the Alternative Duspute Resolution Mechanism, instead of going to court.
“We spend a lot of time, and money in court but if taxpayers opted for ADR, it would be better, they would save costs, time and money, let’s embrace this option over court,” she said.
ADR is a mechanism used by taxpayers, other than courts to resolve disputes with the URA.
Some of the existing ADR mechanisms include negotiation, mediation, arbitration, conciliation, among others.
Under the Tax Procedures Code (Amendment) Bill 2021, the government introduced ADR which was passed into law.
A taxpayer who is dissatisfied with URA’s decision may apply to the Commissioner General to use ADR to resolve the tax dispute.
Rubagumya said, “We were able to collect Shs365Bn from ADR mechanism in the FY 2020/21, which was a good thing, we had discussions with taxpayers who had these cases in Courts of Law for the last 8 to 10 years and reached a common understanding on how to treat their transactions.”
Speaking at the same event, Pheona Nabasa Wall, the president of the Uganda Law Society noted that 75% of Uganda’s economy is informal, where 85% of these are women and 92% of these categories are youth, saying URA should find mechanisms on how to tap into the tax base.
“you could come up with friendly environment and build trust these people will come on board and start paying taxes,” she said.
Joseph Okuja, the Director Tax and Regulatory Services at Libra Associates and Consultancy, advised taxpayers to always maintain records of their assessments so that they have evidence to back them up incase a tax dispute comes up.
Okuja noted that Uganda, has a modern tax system that is widely recognized and used by many other modern countries.
“It is based on voluntary compliance whereby a taxpayer has an obligation to self assess and comply,” He said.
Moses Kagwa, the Director Economic Affairs at the Ministry of Finance, Planning and Development, noted that the government is providing incentives to the people to enable them become formal.
