National Social Security Fund (NSSF) has sued Uganda Revenue Authority (URA), seeking recovery of Shs84 billion resulting from alleged levy of illegal taxes.In a case filed in the Commercial Division of the High Court, NSSF is also seeking for a permanent injunction stopping the Commissioner General of URA, the servants or agents, from directly or indirectly taking steps against the NSSF to enforce payment of the disputed taxes worth Shs84, 404,048,075.
‘Unlawful taxes’NSSF wants a court declaration that the taxes in dispute, which form the amount assessed as contained in the defendant’s letter dated May 8, 2014, are unlawful and unenforceable against the plaintiff.
NSSF also claims that the method of apportionment of expenses adopted by URA disallowing the expenses that relate to class of income that is excluded from gross income is improper, illegal and unenforceable.
They also claim that the interest transfer to the members fund is an allowable deduction and meets the conditions for deductibility provided under Section 25 of the Income Tax Act 1997, and that URA is bound by the aice it offered NSSF on August 23, 2001 with respect to members accounts.
As a result, NSSF is seeking rewards in form of General damages and costs and a court declaration that the defendant (URA) is bound by the aice it offered the plaintiff on August 23, 2001 with respect to interest to members Accounts.
Background to the caseIt is alleged that on August 23, 2001, URA wrote to NSSF stating, among others, that interest to members accounts has been revisited and accepted as an allowable deduction.
However, sometime in 2013, URA conducted an audit of the tax affairs of NSSF and issued their report on April 15, 2013. This was followed by a letter dated May 17, 2013 forwarding copies of the assessment and letter with detailed workings of the audit review.On June 6 2013, the plaintiff tax aisers, PricewaterhouseCoopers, wrote to URA setting out the fund’s position with respect to the point raised by URA in their letter of April 15, 2013.
Consequently, URA has been summoned to appear and defend itself against the claims brought against it by NSSF.The defendant (URA) is required to file its defence within 15 days from the time of service.None of the parties (NSSF or URA) was willing to comment as the matter is before Court.
what the law says
Section 5 of the Income Tax Assessment Act 1997 stipulates that (General interest charge payable on unpaid income tax or shortfall interest charge), as originally enacted, applies to an amount of income tax or shortfall interest charge you must pay for a financial year, if the income tax or shortfall interest charge is due to be paid on or after the commencement of that section.
A tax protester is someone who refuses to pay a tax on constitutional or legal grounds, typically because he or she claims that the tax laws are unconstitutional or otherwise invalid. Tax protesters are different from tax resisters, who refuse to pay taxes as a protest against the government or its policies, not out of a belief that the tax law itself is invalid. Tax protester claims have most prominently been made in the United States, which has a large and organised culture of people who embrace such theories, but have also been observed in some other countries. [email protected]
SOURCE: Daily Monitor