Menu Close

Court blocks URA from taxing Warid

Court has blocked Uganda Revenue Authority from collecting Shs1.4 billion in taxes from Warid Telecom Ltd. Commercial Court Registrar, Ms Gladys Nakibule has issued an interim order against URA and its Commissioner for Customs restraining them from collecting the above sum of money following an application by the company for the same pending determination of an application for a temporary injunction.

The order is arising from a case Warid Telecom filed against the revenue body challenging its decision demanding for the stated money in question in Import Duty, Value Added Tax and Withholding tax arising from importation of the company’s plant and machinery equipment.

According to the company, the Ministry of Finance, Planning and Economic Development in 2007 granted investment incentive to its management in respect of its plant and machinery, which was to be imported duty free.

In its letter dated September 1 and October 4, 2007, the Ministry advised the company to submit details of the import transaction to the Commissioner Customs, which the company management duly did. The Commissioner Customs scrutinized the items but advised the company that all equipments would be treated as plant and machinery and that VAT would be deferrable.

The company claims it imported the items but to its surprise the Commissioner Customs demanded Shs406.7 million and import tax due for palisade fencing, one of the items. The company wrote to the Ministry of Finance seeking its intervention in the matter since the fencing materials were part of the plant and machinery but to no avail. The revenue body, during the same period went ahead to demand various amounts of taxes amounting to Shs1.4 billion.

According to the telecom company the revenue forcefully debited Shs172.4 million from the company gross payment account for which it demands a refund.

The telecom company contends the various amounts of tax demanded and the agency notice issued to the bank were not preceded by any tax assessment.

Warid Telecom further contends the palisade fencing materials were part of the plant and machinery which were exempt from tax therefore demanding tax on the same is unlawful.

The company therefore wants a declaration that the palisade fencing material imported are exempt from import duty and issuance of third party notice to the bank in a bid to recover taxes over its transaction is unlawful.

The company further wants orders for refund of monies that were forcefully debited from the company account and costs.

The court has further restrained the revenue body from enforcing the third party notice it issued to Stanbic bank in a bid to recover part of the tax claimed amounting to Shs160.9 million. “An order is issued restraining the defendants and its agents from enforcing the third party notice issued to Stanbic bank on June 5, 2009 and any other tax collections pending determination of an application for a temporary injunction”, the interim order reads in part.