What you need to know:
Annulled. URA had cancelled registration of the chain store, along with other 900 local companies.
Uchumi has dismissed allegations that it has been collecting Value Added Tax (VAT) on behalf of the Uganda Revenue Authority (URA) and not remitting it.
Speaking to the Daily Monitor last week, the Uchumi Supermarkets (U) Ltd country manager, Mr Jeff Nchaga, denies any non-compliance, saying the mentioned matter is not in any way related to Uchumi (U) Ltd.
“Uchumi Supermarkets is law abiding and a tax compliant company that cannot dodge remitting VAT,” Mr Nchaga said.
The Uganda Revenue Authority published a list of 901 firms, whose VAT registration was cancelled at the beginning of last month, saying they had been collecting the tax on its behalf and not remitting it to the tax body.
URA also went ahead and warned the public against accepting VAT invoices from the published companies.
This, according to him, impacted the retail chain store as its suppliers never wanted to deal with them, fearing that it would not be able to claim VAT from the tax body.
“Uchumi (U) Ltd which is not in any way related to Uchumi Supermarkets (U) Ltd; it’s a different company incorporated somewhere in Ntinda but our suppliers think it’s the supermarket. We requested URA to make a clarification but they are yet to,” he said.
VAT is a form of consumption tax that is charged on the purchase price for a consumer while a seller pays on the value added to a product or service.
The tax collected by companies on behalf of URA whenever they charge for goods and services can, however, be reclaimed by companies.
VAT is said to be accounting for the biggest number of defaulters of all the tax avenues for URA.
The other companies whose VAT registrations were deactivated, either because of filing false results or failure to submit returns completely, include Turkish Airlines Inc, Uganda Air Cargo Corporation, Intercom Uganda Ltd, Life Care Investments (U) Ltd, Hot Loaf Bakery Kabale Ltd, Queens Coach Uganda Ltd and Theatre Factory, among others. Efforts to get a comment from URA proved futile as the emailed questions were neither responded to nor were phone calls answered or returned.
what it means to be cancelled and why
VAT cancellation means that a company or individual is removed from the VAT register and URA does not have any authority to levy VAT on their supplies.
A company or individual’s VAT will be cancelled when: it is established it was was neither required nor entitled to apply for registration; they do not or ceased to have a fixed place of abode or business or they have not kept proper accounting records relating to any activity carried out.
A company or individual will be cancelled if they have not submitted regular or reliable tax returns; or if according the Commissioner General, they are not fit to be registered.
A value-added tax (VAT) is a form of consumption tax. The purpose of VAT is to generate tax revenues to the government similar to the corporate income tax or the personal income tax.
A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer.