The Anti-Corruption Court sitting in Kololo, Kampala, has sent three businessmen to jail for flaunting and cheating taxes.
The directors of Wellex Hardware Ltd, Jigar Chandarana and two others, were convicted this week for generating and selling fictitious invoices, the court said.
Denis Kugonza, the Commissioner of Tax Investigations at URA, says the taxpayers if found guilty will be VAT deregistered and their claimed Input VAT disallowed by URA.
According to Kugonza, tax fraud occurs when a business or an individual willfully and intentionally falsifies information of the tax return in order to reduce tax liability. He also notes that some of the most abused tax scams URA is dealing with is Invoice trading also known as missing trader.
“Here, companies are formed without any business but they only issue invoices to reduce the tax liability of VAT so that they can increase the claim of input VAT and reduce their liability.
Section 62H(c) of the Tax Procedures Code (Amendment) Act, 2022 explains that a taxpayer commits an offense if he or she makes a false or misleading statement in the information return. Upon conviction, the offense attracts a fine not exceeding 2500 currency points for each day of default or imprisonment for a term not exceeding ten years or both. Each currency point amounts to UGX. 20,000/=.
Meanwhile, for a taxpayer to register for VAT, they must have a fixed place of abode and keep proper accounting records related to all the business activity. Also, if they have made taxable supplies during the past 3 calendar months with a gross value of UGX.37.5 million (exclusive of VAT), they have to register for VAT immediately.
Currently, all VAT registered taxpayers are required to issue invoices and receipts online by enrolling for the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) to enjoy the benefits that come along with the system.
Taxpayers are therefore advised to get involved in their businesses and avoid delegating completely to consultants or accountants. For example sharing of Taxpayer Identification Numbers(TINs), these can be manipulated and the tax liability goes to the owner. Minimise cash transactions and transact through banks for clear verification.
