By Francis Kagolo
Telecom companies MTN and Orange have explained their disagreements with the tax body (URA), clarifying that it is not tax evasion but disputes over tariffs.
Officials said their companies are not among the tax defaulters despite being listed in the Auditor General’s report among those with tax arrears.
It was reported on Saturday that the companies were among the top tax defaulters. This followed the Auditor General’s report for the year ending June 2013, which revealed an increase in tax arrears under memoranda of understanding from sh8.1b in 2011/2012 to sh37b.
The report shows that five companies alone accounted for 77.90% of the arrears. Of these, three are telecom companies.
“The MTN debt has been outstanding since July, 2009 as it was objected to and referred to World Customs Organization (WCO). Orange case was pending hearing,” says the report.
Yesterday (Sunday), MTN general manager for legal and corporate services, Anthony Katamba, explained the technicality that tax arrears were different from defaulting.
“You cannot be a tax defaulter when you have a matter put before a world professional tax body like WCO,” Katamba stated. “We (MTN) are recognized every year as one of the most tax responsible businesses. For 10 years now we have been recognized by URA as one of the most compliant companies,” he added.
According to Katamba, the dispute arose when MTN imported spare parts for telecom network on which URA wanted to impose a tax tariff of a complete unit.
“A complete unit attracts a higher tax than spare parts. It is a difference of opinion in interpretation of tariffs.” Katamba said they are now awaiting the WCO’s interpretation.
Likewise, Maxmilia Byenkya, the chief officer for legal and corporate affairs at Orange telecom, said calling two of their disputes were referred to WCO while one case was resolved out of court.
According to Byenkya, URA conducted an audit and claimed that Orange had ‘misclassified and miss-declared’ certain items and ordered the company to pay sh18b in taxes.
Orange disputed the figure and URA downed it to sh8b. “We still did not agree. We filed a case against URA disputing their figure. Finally it was resolved last year through out of court settlement. We are now waiting for WCO’s ruling on the other disputes,” Byenkya said.
Francis Kamulegeya, an expert in tax law, also told New Vision that referring issues to the WCO was the best process a settle tax dispute arising out of customs and it does not mean the company intends to default.
“Matters relating to customs are governed by WCO. If URA sets a tax which the company disagrees with, they can both agree and submit the case to WCO. Then you sit back and wait for guidance from WCO,” he explained.
“This is not defaulting. It is the due process arising out of disputes over tax amounts.”