Adjumani, contractors clash over Shs420m withholding tax

Local contractors in Adjumani District have petitioned the chief administrative officer (CAO) demanding an explanation for alleged unremitted withholding taxes to Uganda Revenue Authority (URA) under the Development Response to Displacement projects (DRDIP) worth over Shs420 million.

According to the petitioners, the money was collected from the various sub-projects for the 2018/2019, 2019/2020, 2020/2021 and 2021/2022 financial years.

In a letter dated April 6, that was delivered to the CAO, the contractors claim that since 2018, the district has been deducting the withholding tax of 6 percent of the contract sum but there has been no evidence of remittance to URA.

“We the aggrieved contractors are seeking express clarification on the deduction of withholding tax on Development Response to Displacement Impact Project (DRDIP) which by law has been fixed at 6 percent of the total project value,” part of the petition seen by this publication reads. 

It adds: “We the aggrieved party have been paying withholding tax which was directly deducted from the DRDIP desk office during the financial years 2018/2019, 2020/2021, and 2021/2022. But to date, we are not in receipt of evidence showing that we have met our tax obligation to URA.”
 
How taxes were deducted

Some of the contractors that implemented projects and were deducted the withholding taxes include Kate contractors that constructed three classroom blocks with office, three blocks of five-stance ventilated improved pit-latrines, and installation of the 10,000-litre tank at Zoka Primary School at Shs240 million and paid Shs14 million as withholding tax.

The same company undertook the Alere construction of staff houses, kitchens, pit-latrines, and fencing worth Shs866.8 million and paid Shs52 million in tax. They also constructed a classroom block, staff houses, the kitchen, and pit-latrine at Kozeiza Primary School worth Shs509 million and paid Shs30 million as withholding tax.

According to the signed documents, Silver Courts, another contractor carried out the construction of three classroom blocks with an office, three blocks of five stance ventilated improved pit-latrines, installation of a 10000-litre tank, and supply of furniture at Leanguru Primary School valued at Shs318 million and paid withholding taxes of Shs19 million.

It also carried out the construction of a 100-seater conference hall, six office spaces, a kitchen, a store, installation of a 5,000-litre tank, and supply of furniture at the Office of the Prime Minister in Pakele at the cost of Shs530 million and paid Shs31.8 million as tax.

Analog Construction Company also constructed three classroom blocks with offices, three blocks of five-stance ventilated improved pit-latrines, installation of 10,000-litre tanks, and supply of furniture at the cost of Shs332.9 million and paid Shs19.9 million as tax.

They also constructed a market with lockups, two blocks of five-stance ventilated improved pit-latrines, installation of 5000-litre tanks, and fencing valued at Shs550 million and a tax of Shs33 million.

At Rende Primary School, they constructed two classroom blocks with an office, two blocks of five-stance ventilated improved pit-latrine, and installation of 5,000-litre tank at Shs504 million and paid a tax of Shs30 million.

Other aggrieved contractors 

Other contractors are Equatoria brothers who constructed three classroom blocks with an office, two blocks of five stance ventilated improved pit-latrines, installation of the 10,000-litre tank at Kureku Primary School valued at Shs219.9 million, and paid a tax of Shs13 million for the construction of an abattoir at Adjumani Town Council at Shs212 million and a tax of Shs12 million

Mavadi Multi-purpose Ltd constructed a water testing laboratory and installed a 10,000-litre tank at Shs499 million and a tax of Shs29.9 million.

Marinyo Brothers also constructed two blocks of staff houses, a kitchen, and a pit-latrine, costing Shs443 million and a tax of Shs26 million.

Jamo Contractors and Suppliers constructed three classroom blocks, five stances ventilated improved pit-latrines and installed a 10,000-litre tank at Massa Primary School valued at Shs222 million and paid tax of Shs13 million.

They also constructed a block at Minia Adjumani Town Council at Shs451 million and paid a tax of Shs27 million. 

G. Lagua Company undertook the construction of the Ofua food store and drying slab and the fencing at Ofua at Shs250 million and paid a tax of Shs15 million. All these said their withholding taxes have not been remitted to URA by the district administration. 

Response

The Adjumani District CAO, Mr Grandfield Oryono, denied collecting money from contractors, saying contractors do not pay withholding tax under the DRDIP project.

He further stressed that DRDIP funds are managed by the various community sub-project officials (CPMCs) and that the district simply facilitates the process. He said payments of withholding taxes rest on the shoulders of community sub-project leaders but not the office of the CAO.

The DRDIP desk officer, Mr Abubakar Gulam, said his office has been deducting the 6 percent in withholding taxes directly from the accounts of community sub-projects and conceded that there have been challenges remitting the cash to URA accounts.

He denied abusing the tax cash and promised to fix the problem so that URA would issue appropriate acknowledgment documents in proof of tax cash remittances to the affected contractors.