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Govt cancels 28b Sudhir, Basajja debt

By Vision Reporter

Added 6th May 2009 03:00 AM

THE GOVERNMENT last year cancelled tax arrears totalling sh28b of two companies, owned by city businessmen Hassan Basajjabalaba and Sudhir Ruparelia.

THE GOVERNMENT last year cancelled tax arrears totalling sh28b of two companies, owned by city businessmen Hassan Basajjabalaba and Sudhir Ruparelia.

By Madinah Tebajjukira

THE GOVERNMENT last year cancelled tax arrears totalling sh28b of two companies, owned by city businessmen Hassan Basajjabalaba and Sudhir Ruparelia.

Sudhir, the owner of Speke Resort Munyonyo, Kabira Country Club and Crane Bank, was forgiven sh26b, which his company, Meera Investments, had accumulated between 1996 and 2002. This included sh24.1b in corporate tax arrears (tax on profits) and sh1.9b in VAT arrears.

The second biggest beneficiary of the pardon was Hassan Basajjabalaba. His company, Hides and Skins, had tax arrears worth sh1.7b cancelled, of which sh1.3b in corporate tax and sh368m in individual taxes.

The figures are contained in a document submitted by URA to the parliamentary committee on commissions, statutory and state enterprises.

Apart from the two companies, another sh10b was cancelled for 21 companies, both public and private, whose debts to URA had accumulated over the years.

Among the top defaulters were Uganda Posts (sh1.5b), International School of Uganda (sh1.2b), Shah and Company (sh1.1b), Sterling Civil Engineering (sh990m) and Myrtade (812m).

Other long term tax defaulters include Shamji Hirji, Frederick Kasirye Hardwares, Adranz Nalukolongo, and Tumpeco belonging to Gordon Wavamunno.

The parliamentary committee is investigating how the decision on the waivers was reached. It also demands an investigation into the directors of the companies.

“It is possible that some of the directors of these defaulting companies are working with the Government whereby they are able to connive and influence the decision,” said committee chairperson Reagan Okumu.

“We want to know the reasons why companies owned by Sudhir and Basajjabalaba, who have repeatedly benefited from Government subsidies, are again getting waivers.”

According to Okumu, a few Government officials are continuing to sink the country economically. He noted that the practice of tax waivers does not promote fair competition in the private sector.

“Because of the tax waivers and special benefits to individual companies, some businesses have failed to compete.”

According to the document, a total of sh67b in taxes owed to URA was waived in 2008. Of those, 80% were domestic taxes, as opposed to import taxes. Among the domestic taxes, three quarter is attributed to the 25 companies which URA ranked as the top defaulters.

“A further review of taxes waived in 2008 by tax category showed that 80% of the domestic taxes waived are corporation tax, which is the 30% tax on profits,” reads the summarised document.

Okumu said sh12b was owed to URA in Pay as You Earn which according to him creates the suspicion of high level connivance with the defaulting companies.

“We fail to understand how and why companies fail to remit PAYE. This shows that there is collusion between URA and these companies.”

Okumu said the committee would meet officials from URA and the finance ministry over the matter before the budget for the next financial year is passed.

In 2006, the Government waived off sh81b in debts, all owed by government institutions.

Last year, the Parliament passed the Finance Act 2008 whose purpose, among other things, was to grant tax waivers.

Govt cancels 28b Sudhir, Basajja debt

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