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MTN, Orange explain tax dispute with URA
Publish Date: Aug 11, 2014
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Between the lines: Highlights from MTN,Orange


The Auditor General’s report for the year ending June 2013, stated that there was an increase in tax arrears
from sh8.1b in 2011/2012 to sh37b

Matters relating to customs are governed by WCO

By Vision Reporter
Telecom companies, MTN and Orange, have explained their disagreements with the tax body (URA), stressing that they are not involved in any tax evasion. Officials said their companies are not among the tax defaulters although they were listed in the Auditor General’s report among those with tax arrears.The Auditor General’s report for the year ending June 2013, stated that there was an increase in tax arrears from sh8.1b in 2011/2012 to sh37b. The report showed that five companies alone accounted for 78% 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 Organisation (WCO). Orange case was pending hearing,” the report read. Yesterday, MTN general manager for legal and corporate services, Anthony Katamba,explained 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 recognised every year as one of the most tax responsible businesses. For 10 years now, we have been recognised by URA as one of the most compliant companies,” he added.According to Katamba, the tax dispute arose when MTN imported spare parts for telecom network on which URA wanted to impose a tax tariff for a complete unit. “A complete unit attracts a higher tax than spare parts It is a difference of opinion in interpretation of tariffs,” he said. 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 two of their tax disputes were referred to WCO, while a case was resolved out of court.According to Byenkya,URA conducted an audit and claimed that Orange had mi"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 an out of court settlement.

We are now waiting for WCO’s ruling on the other disputes,” Byenkya explained. Francis Kamulegeya, an expert in tax law, also told New Vision that referring issues to the WCO was the best process to settle tax disputes 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. You then 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,” he said.

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