The Uganda Revenue Authority has issued an invitation to the taxpaying public to submit a voluntary disclosure and benefit from a remission of interest and fines on previously undeclared and unpaid tax or late tax payments. (See Public Notice dated 19 July 2020)
Under a voluntary disclosure program, eligible taxpayers typically report their delinquent taxes in return for reduced penalties, a reduced likelihood of criminal prosecution upon detection of the evasion, or both. It is thus a form of “tax amnesty.”
Under the Tax Procedures Code Act of Uganda, a voluntary disclosure is a statutorily agreed arrangement under which a taxpayer, who through willfulness or omission has an undeclared tax liability, can come forward and declare this willful or unintended noncompliance to the taxman. These may be assessed but unpaid tax, tax arrears not currently under any deferred payment arrangement, or late filing or late payment obligations. If they make a disclosure within an agreed timeframe and follow through by making an unconditional tax declaration or return and make corresponding payments, they could obtain a statutorily guaranteed pardon from the taxman from all interest and fines accruing on their non-compliance.
As businesses seek to recover from the adverse effects of COVID-19 induced stress and lockdown or even seek to just stay afloat, many should be looking to harness opportunities that are made available to them to improve their bottom line. As we know, cash flow is key in maintaining a successful business and any firm that seeks to make profit must increase its earnings while reducing or eliminating unnecessary and non-deductible costs. Therefore, any opportunity that can keep money in the business should be embraced.
Filing a voluntary disclosure could save an exposed business or person unnecessary expenses and cost in payments of statutory interest and fines.
Those that could take advantage of the Voluntary Disclosure opportunity include the following;
- Any taxpayer who has through omission or willful commission not declared any tax due to government on income, including rental income.
- Taxpayers who would become liable to huge tax assessments and penalties as a result of a tax health check or audit.
- Statutory authorities that have unpaid tax debts especially Pay As You Earn and Withholding Tax as a result of non-compliance with statutory withholding obligations.
- Taxpayers who have been involved in Value Added Tax fraud schemes either knowingly or unknowingly.
- Multinational Enterprises with income sourced in Uganda who through transfer pricing and complex tax avoidance schemes have not paid tax in Uganda and would be found culpable under the anti-avoidance provisions of the law.
- Local manufacturers with volumes of under declared products intended to evade excise duty.
- Taxpayers with unpaid liabilities under the Gaming and Lotteries tax regime.
With the coming on board of the Electronic Fiscal Receipting and Invoicing Solution, and very soon the e-tax II system, URA’s business intelligence and data analytics capabilities are greatly enhanced and chances of your non-compliance being exposed are much higher.
Take advantage of this opportunity extended by the taxman and using the help of a tax lawyer and/or tax consultant, find out how you can file your voluntary disclosure today.