URA sued over new tax law for SMEs

The Uganda Revenue Authority (URA) has been sued for allegedly not effecting the lowering of taxes for small and medium enterprises (SMEs).

The petitioners, Open Forum Initiative, a civic-tech policy advocacy group, aver that last year Parliament amended the Income Tax Act.

They further say the amendment significantly reduced the presumptive tax rates applicable to small businesses with a gross turnover of less than Shs150m and that the same amendment was meant to take effect on July 1, 2020.

But to their surprise, the petitioners say the tax body has not complied with the amendment and has maintained the old taxes.

The petitioner avers that traditionally, once a provision of the law is repealed, it becomes non-existent and does not hold any force of law.

“Despite the fact that the amendment ushered in a new regime, Uganda Revenue Authority did not change the rates in its system. As a result, taxpayers have been paying presumptive tax for the Financial Year 2020/21 using the old rates, which were repealed and are much higher,” the petitioners contend.

They add: “The presumptive tax charged for the year 2020/21 was wrongly imposed since the assessment was made on the basis of a non-existent law contrary to Article 152 (1) of the Constitution. This is illegal.”

Demands

Through their lawyers of Atigo & Co. Advocates, the petitioners now want the Commissioner General’s office to carry forward the money in excess of taxes by SMEs to the next financial year.

They also want the tax body to issue a statement echoing their commitment to the taxpayers’ rights charter.

The petitioners also want the body to put in place a memorandum of understanding in consultation with civil society on the formulation of taxes, tax law and policy involving SMEs.