Polythene makers go to court over 120% tax
Jan 19, 2009
Nine polythene bag makers have petitioned the Commercial Court against a move by the Uganda Revenue Authority (URA) to sell off their properties to recover excise duty.
By David Muwanga
Nine polythene bag makers have petitioned the Commercial Court against a move by the Uganda Revenue Authority (URA) to sell off their properties to recover excise duty.
The affected firms include Nile Plastic Industries, Tic Plastic Company, SPA Packaging Uganda, Quality Plastics Uganda and Omega Plastics.
Others are F. Sonko Uganda, Tesco Industries, Medipoint Industries and Plasto Foam Industries.
East African Community (EAC) member states banned production of polythene bags of less than 30 microns and imposed a 120% excise duty starting 2006/07 financial year to discourage the making of polythene bags in the region.
However, Kenya did not implement the policy and reduced the tax to 50%, while Uganda went ahead and implemented the 120% tax policy.
In one of the letters seen by The New Vision dated October 7, 2008, Jennifer Semakula Musisi, the URA acting commissioner general, issued a warrant of distress authorising M/S Simba Speed Auctioneers to recover over sh1.9b from M/s Spa Packaging Uganda.
“I authorise you to collect and recover the sum of sh1,969,912,592 due for excise duty from M/S Spa Packaging (U) Limited,†the letter said.
“I further authorise you with the aid of a Police officer, do forth levy by distress the said sum together with costs and charges and incidental to the taking and keeping of such distress on goods, chattels or other distrainable things wherever they may be found and all vessels, vehicles, animals used within the partner states used in the manufacture of goods...or any land in the use or possession of the said licencee or any person on his behalf or in trust for him,†it added.
Alew-Janyare-Donatus, the Simba Speed Auctioneers chief executive officer, in a letter dated October 28, 2008, gave the firm two hours within which to clear the tax arrears.
“We hereby give you two hours from receipt of this letter to clear the money being demanded by our principal plus our fees and costs before we come to enforce the order fully as is expected of us,†he said.
“The nine firms that received the demand notes went to the Commercial Court to protest against the instruction.
“The case has been adjourned to January 21,†Gideon Badagawa, the Uganda Manufacturers Association (UMA) executive director, said.
“In Kenya, the finance ministry has the authority to amend an Act, which is not the case here because the Act can only be amended by Parliament.
“We are appealing to Members of Parliament to either waive the tax or reduce it like Kenya has done,†he said.
“If these firms are closed, it is our people employed by those companies who will lose jobs, while the Government will lose other taxes including value added tax, pay as you earn, income and corporation taxes.â€
Nine polythene bag makers have petitioned the Commercial Court against a move by the Uganda Revenue Authority (URA) to sell off their properties to recover excise duty.
The affected firms include Nile Plastic Industries, Tic Plastic Company, SPA Packaging Uganda, Quality Plastics Uganda and Omega Plastics.
Others are F. Sonko Uganda, Tesco Industries, Medipoint Industries and Plasto Foam Industries.
East African Community (EAC) member states banned production of polythene bags of less than 30 microns and imposed a 120% excise duty starting 2006/07 financial year to discourage the making of polythene bags in the region.
However, Kenya did not implement the policy and reduced the tax to 50%, while Uganda went ahead and implemented the 120% tax policy.
In one of the letters seen by The New Vision dated October 7, 2008, Jennifer Semakula Musisi, the URA acting commissioner general, issued a warrant of distress authorising M/S Simba Speed Auctioneers to recover over sh1.9b from M/s Spa Packaging Uganda.
“I authorise you to collect and recover the sum of sh1,969,912,592 due for excise duty from M/S Spa Packaging (U) Limited,†the letter said.
“I further authorise you with the aid of a Police officer, do forth levy by distress the said sum together with costs and charges and incidental to the taking and keeping of such distress on goods, chattels or other distrainable things wherever they may be found and all vessels, vehicles, animals used within the partner states used in the manufacture of goods...or any land in the use or possession of the said licencee or any person on his behalf or in trust for him,†it added.
Alew-Janyare-Donatus, the Simba Speed Auctioneers chief executive officer, in a letter dated October 28, 2008, gave the firm two hours within which to clear the tax arrears.
“We hereby give you two hours from receipt of this letter to clear the money being demanded by our principal plus our fees and costs before we come to enforce the order fully as is expected of us,†he said.
“The nine firms that received the demand notes went to the Commercial Court to protest against the instruction.
“The case has been adjourned to January 21,†Gideon Badagawa, the Uganda Manufacturers Association (UMA) executive director, said.
“In Kenya, the finance ministry has the authority to amend an Act, which is not the case here because the Act can only be amended by Parliament.
“We are appealing to Members of Parliament to either waive the tax or reduce it like Kenya has done,†he said.
“If these firms are closed, it is our people employed by those companies who will lose jobs, while the Government will lose other taxes including value added tax, pay as you earn, income and corporation taxes.â€