URA makes U-turn on sending money abroad
In the spotlight. URA boss Doris Akol. PHOTO BY ALEX ESAGALA
What you need to know:
- Position. The tax body says after further consideration and consultations, they have decided that compliance with the circular will no longer be a requirement.
Uganda Revenue Authority (URA) has made a U-turn on its directive to commercial banks and other financial institutions in the country to enforce the law that mandates people who want to transfer “any funds in excess of Shs50m outside Uganda” to present tax clearance.
The Commissioner General, Ms Doris Akol, has written to all commercial banks withdrawing the compliance advisory to Section 134(d) of the income tax.
“Reference is made to the Compliance Advisory Circular Ref: URA /DT/COM 36 dated October 25, 2019. On further consideration and consultations, I hereby advise that the compliance with the circular will no longer be a requirement at this time,” Ms Akol’s October 31 letter to managing director Stanbic Bank Uganda Limited reads in part.
“This communication supersedes the earlier one issued by the Commissioner Domestic Taxes. Developing Uganda Together”. Her latest letter was copied to Finance Minister Matia Kasaija, Governor Bank of Uganda Emmanuel Tumusiime Mutebile, Secretary to Treasury Keith Muhakanizi, Director Banks supervision at BoU, Dr Tumubweine Twinemanzi ,and the Uganda Bankers Association.
URA spokesperson Vincent Seruma yesterday confirmed the Commissioner General’s letter.
Ms Akol’s letter came after commercial banks and other financial institutions, traders, foreign and local investors vilified the new URA directive and warned that hurried implementation of the mandatory tax clearance policy might hurt the economy.
Sources in the Ministry of Finance told Saturday Monitor that the Uganda Bankers Association members also rejected the directive and demanded that Bank of Uganda and other stakeholders in the financial sector be consulted before implementation.
By press time, it was not clear whether the cancellation of the policy was ordered by the President, Mr Kasaija or it was a decision of URA boss.
On October 25, Mr Henry Saka, the commissioner of domestic taxes, in a letter titled: “Compliance Advisory to Section 134(D) of the Income Tax Act, with the Bank of Uganda among those copied in the letter” asked managing director Orient Bank to enforce Section 34 (d) and Regulations No. 164 of the Income Tax Act.
Under the law, the tax body has made it clear that “a taxpayer transferring funds in excess of 2500 currency points from Uganda to a place outside Uganda shall obtain a tax clearance certificate from the commissioner.”
One currency point equals Shs20,000.
Background
The revocation of the URA directive came on the same day the commissioner domestic taxes wrote to managing director Orient Bank promising to engage stakeholders in the sector before implementation of the disputed tax clearance requirement in the Tax Income Act.
In his letter titled: “Compliance advisory – clarification” Mr Saka, told the managing director of Orient Bank, that the enforcement of the law requiring transfer of Shs50million and above will proceed after modalities of operation, following engagement has been agreed upon.
“This is to clarify that before implementation, in order to minimise inconvenience to clients, URA will engage the industry to develop a convenient mode of operation including the thresholds applicable and then necessary automation,” reads the correspondence to the financial institution.
