Inside Museveni's rental tax contract with US firm

In the meeting, Ms Connolly-LaBelle who heads a global technology company called RippleNami Inc. promised to use her exclusive experience to do visualisation platform to consolidate fragmented government data on commercial and residential buildings to streamline rental tax collections in the country.

Mr John Musinguzi Rujoki, the Commissioner General of URA, said the deal was signed and the company will bring on board new technology to help URA to effectively collect the tax.

“This company is going to provide technology that is going to help URA to effectively collect and assess tax. It is still URA function to collect and assess tax but this is a technology company that will pattern with URA providing accurate information on rental tax,’’ he said.

Mr Musingunzi maintained that this kind of technology was not in the country before adding that the rental tax compliance is quite low.

The President, according to sources analysed the proposal in 2018 and asked Mr Kasaija to work it out with URA, Kampala Capital City Authority, Lands ministry and Uganda Registration Services Bureau (URSB) and ensure that the company signs the contract.

Under the deal, RippleNami Inc. will identify properties and assign them geo-addresses in accordance with internationally accepted standards, link the identified properties to their owners or the persons who earn income from those properties and cross match the identified properties and their ownership with the URA TIN database.

The company will also determine the nature of occupancy by identifying whether a property is owner-occupied or rented out. The system will also determine the occupancy period and provide for current and previous periods.

After determining the occupancy, rental income will be determined and later be used to assess rental tax to be paid prior to standard deductions from each property and by each property owner.

But when the Mr Kasaija presented the proposal in November 2018, four key government departments including URA rejected the deal and saying it raised what sources close to the RippleNami Inc. deal called “technical questions” which needed answers.

For instance, the technical people wanted to know why the American company was being single sourced and yet there other companies offering same services. They also demanded to know the cost of a performance-related contract with targets hooked on URA infrastructure.

They also noted that the technology touted by the American company as “proprietary” was not unique and reiterated that there was no emergency to warrant a single sourcing in contravention of Public Procurement and Disposal of Public Assets (PPDA) rules.

But Mr Keith Muhakanizi, the Secretary to the Treasury, yesterday said the legal procedures were followed during the procurement process.

Under the contract, if the company exposes the hidden tax revenues, then they should be given a percentage of the additional money that would be realised.

The technocrats, however, rejected this proposal on grounds that the percentage was open to abuse and that URA and KCCA had already effected the required tax reforms to curb tax evasion in the country.
However, every time Ms Connolly-LaBelle would follow up on the deal, Mr Kasaija and the technical team would tell her that consultations were still on-going. After two years of waiting, she decided to go back to the President and accused government officials of tossing her around.

Akol sacked
Since the President wrote to Ms Kasaija on November 25, 2018, no deal had been signed with the company until Friday last week.

According to sources, the sacking of former URA boss, Ms Doris Akol, departure of top URA commissioners and the appointment of Mr Musinguzi as the new URA Commissioner General, created room for the deal.

On Friday, Mr Kasaija asked Ms Betty Kasimbazi, the Under Secretary and Accounting Officer, to sign on behalf of government while Faruk Awadh, director for operations Africa, signed on behalf of RippleNami Inc.

“Ministry of Finance has on behalf of government signed an agreement with an American Company RippleNima Inc to provide a solution to improve rental income tax compliance for Uganda,” the June 5 statement reads in part.

Mr Kasaija, who witnessed the signing ceremony, urged URA to collaborate with RippleNami Inc. in solving uncollected rental income tax issues. “On behalf of Government of Uganda, I congratulate all of us who have been involved in one way or another for having patiently worked through this,” said Mr Kasaija.

He asked RippleNami to start working at the beginning of the new Financial Year 2020/2021. URA Commissioner General said they would work closely with government agencies such as the Ministry of Lands, National Identification and Registration Authority, KCCA, URSB and utility companies to provide the necessary data to RippleNami Inc.

Backround

On November 25, 2018, President Museveni directed government officials to sign a contract giving an American company a role to “identify gaps in tax collection” and warned of stern action.

Sources told Daily Monitor that the President’s letter placed Mr Kasaija between a rock and a hard place. The President wanted the contract with RippleNami Inc. signed but the line government departments.

In the letter, President indicated to Mr Kasaija that the contract “must be signed by 1800 hours, November 27, 2018. Failure to implement this on the dot will attract decisive actions from me”.

Justifying the deal, the President told the Finance minister that in 2016, he discovered through the company intelligence that there was massive concealment of tax in rentals with the collusion of the tax authorities.
He said “sympathisers” introduced to him RippleNami Inc. and that the proposal by the company should be given a green light.

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