Works PS queried over untaxed payment to Chinese contractor
Mar 11, 2009
THE works ministry paid the Chinese contractors who redeveloped State House Entebbe without deducting withholding tax of over sh11b, the Auditor General has said.
By Mary Karugaba
and Milton Olupot
THE works ministry paid the Chinese contractors who redeveloped State House Entebbe without deducting withholding tax of over sh11b, the Auditor General has said.
In a report to Parliament, John Muwanga said the ministry in 2004 signed an agreement with Metallurgical Construction Company to develop State House at sh38.5b.
The payment, Muwanga said, contravened the tax laws, for which a penalty should be incurred by the ministry.
However, the permanent secretary, Charles Muganzi, explained that the deductions were not made because of conflicting instructions to the ministry by the former finance minister, Gerald Ssendawula and the Uganda Revenue Authority (URA).
He was appearing before the Public Accounts committee to respond to queries on the matter on Tuesday.
Muganzi said URA directed that the company was obliged to pay the tax.
“The audit has been successfully completed. This, therefore, is to request you to release the payments to the company to enable them continue their operations and meet their tax obligation,†said the letter signed by the Christine Katwe, the acting Assistant commissioner filed delivery domestic taxes.
Ssendawula, Muganzi said, advised that the contractor should be exempted.
“This is to request you to grant a waiver of withholding tax to the company in accordance with section 119 of the Income Tax Act,†Ssendaula wrote.
Muganzi said: “I did not see the minister’s letter at first. The officials who saw it, based the payment on it. When I saw it later, I noticed it was clumsy...I realised that there was something wrong.â€
“I immediately wrote to URA, but they never replied my communication until the minister had left.â€
Muganzi clarified that the entire project was financed by Uganda.
He was reacting to an observation that Ssendawula had written to URA stating that the project was co-financed with China.
The committee chairman, Nandala Mafabi, said Ssendawula’s letter did not mean that the waiver was granted.
MPs Frank Tumwebaze and Alex Byarugaba said the PS was to blame because he authorised payment basing on a letter he had not seen. Mafabi said the committee would invite Ssendawula and URA boss Allen Kigina to explain.
and Milton Olupot
THE works ministry paid the Chinese contractors who redeveloped State House Entebbe without deducting withholding tax of over sh11b, the Auditor General has said.
In a report to Parliament, John Muwanga said the ministry in 2004 signed an agreement with Metallurgical Construction Company to develop State House at sh38.5b.
The payment, Muwanga said, contravened the tax laws, for which a penalty should be incurred by the ministry.
However, the permanent secretary, Charles Muganzi, explained that the deductions were not made because of conflicting instructions to the ministry by the former finance minister, Gerald Ssendawula and the Uganda Revenue Authority (URA).
He was appearing before the Public Accounts committee to respond to queries on the matter on Tuesday.
Muganzi said URA directed that the company was obliged to pay the tax.
“The audit has been successfully completed. This, therefore, is to request you to release the payments to the company to enable them continue their operations and meet their tax obligation,†said the letter signed by the Christine Katwe, the acting Assistant commissioner filed delivery domestic taxes.
Ssendawula, Muganzi said, advised that the contractor should be exempted.
“This is to request you to grant a waiver of withholding tax to the company in accordance with section 119 of the Income Tax Act,†Ssendaula wrote.
Muganzi said: “I did not see the minister’s letter at first. The officials who saw it, based the payment on it. When I saw it later, I noticed it was clumsy...I realised that there was something wrong.â€
“I immediately wrote to URA, but they never replied my communication until the minister had left.â€
Muganzi clarified that the entire project was financed by Uganda.
He was reacting to an observation that Ssendawula had written to URA stating that the project was co-financed with China.
The committee chairman, Nandala Mafabi, said Ssendawula’s letter did not mean that the waiver was granted.
MPs Frank Tumwebaze and Alex Byarugaba said the PS was to blame because he authorised payment basing on a letter he had not seen. Mafabi said the committee would invite Ssendawula and URA boss Allen Kigina to explain.