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City businessman, SK Mbuga faces travel ban over tax evasion

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Security personnel (right) peep into Mbuga’s compound last Friday

Security personnel (right) peep into Mbuga’s compound last Friday 

By Andrew Bagala

Posted  Tuesday, August 19  2014 at  11:40
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Days after hiding his two Hummers, thwarting plans to impound them over a Shs219 million tax liability, city businessman Sully K Mbuga now faces a travel ban.

In an August 15 letter to the Internal Affairs Ministry, URA Acting Commissioner General, Ms Doris Akol stated, “In exercise of the powers conferred upon me by section 105 (1) of the Income Tax Act Cap 340, I hereby certify that the above mentioned person has an outstanding tax liability of UGX. 219,155, 869 and the same continues to attract interest until it is fully paid as per the relevant tax laws.”

“You are therefore requested to prevent the said tax defaulter (Mr Mbuga) from leaving Uganda until he pays the aforesaid tax liability,” added Ms Akol in a letter copied to the South African based businessman who is also reportedly Ugandan singer Leila Kayondo’s lover.

The letter, which the ministry acknowledged on August 18, was addressed to the Director Citizenship and Immigration Control.
According to URA, in the period July 2011-June 2012, Mr Mbuga did not file an Income Tax return as required by law. Accordingly, on 25 November 2013, an administrative estimated income tax assessment was raised.

The assessment required Mr Mbuga to pay Shs192, 241, 990, an amount that should have been paid on January 9, 2014.

“It was emailed to him and his physical address in Makindye Division. We never heard from him and all attempts to trace his whereabouts were futile,” Manager Debt Collection Unit Abdusallam Waiswa said.

In June this year, Mr Mbuga’s name was on URA’s list of shame, a compilation of tax defaulters. On locating his home in Buziga, a city suburb, URA dispatched auctioneers who issued a demand notice. Mr Mbuga allegedly issued URA two cheques; one of Shs100 million dated August 14 and another of Shs119 million dated August 30.

“However, the Shs 100 million cheque was not honored by the bank.The tax assessment was not import duty on the powerful vehicles. Rather, it is income tax,” Mr Waiswa explained.

But Mr Mbuga insists he is not aware of the taxes URA is talking about since his businesses are in South Africa and not Uganda.
“How can URA claim I owe them yet I don’t do my businesses from here? Besides, I signed the said cheques under duress. I personally went to the bank and cancelled the cheques after being advised by my lawyer,” Mr Mbuga said.

According to the Income Tax Act, any resident taxpayer has to declare each year of income as stipulated by Section 9 of the Income Tax Act. Additionally, a resident person is supposed to file returns for every year of income.

“If the income arose as a result of activities outside Uganda, such a person has to declare here and in the other country so that they can benefit from foreign tax credits,” Waiswa explained, adding that the foreign tax credits would reduce one’s tax liability.
Waiswa added, “He had 45 days to challenge the assessment but he did not.”