President Museveni has insisted that an American company which he personally introduced to Uganda Revenue Authority (URA) should be quickly given a contract to collect data on what he describes as “massive tax evasion” in Uganda.
“Since two years ago I discovered that there was massive concealment of tax in rentals with the collusion of the tax authorities,” said Museveni.
“In order to expose this, some of our sympathizers introduced an American company known as Ripple-nami to me and, as usual, I introduced them to you. They knew there was massive tax concealment and their proposal was that we should allow them to collect data so as to show how the government is losing taxes, and, if they expose the hidden revenues, then they should be given a percentage of the additional money that was hidden,” he added.
Museveni’s directive to Finance Minister Matia Kasaija, which ChimpReports has seen, is dated November 25, 2018.
The president’s directive, while in good faith, can be interpreted as aimed at pressuring bureaucrats to sign a contract with a foreign company before the conclusion of the procurement process.
This, to some extent, could see government officials make mistakes as they rush to implement the presidential directive.
For example, a quick check on the company’s website does not show any experience or expertise in specialized tax data analysis.
In his letter to Kasaija, Museveni said the American company’s officials “have been tossed around for two years now by people that may have something to hide. After this proposal came to the table, then the wonderful URA said they were going to do what the American company was proposing to do. The question, then, was: Why hadn’t you done it before? Where are the results? Why did you only collect Shs 71.74bn in rent in 2016/17? If URA claims that they, together with KCCA, are now doing what they had refused to do all these years, I, as head of government, want to countercheck and be sure that there are no more games. The partners I trust are the ones who did the whistle-blowing some two years ago, in 2016.”
He added: “I am, therefore, now directing all the obstructions that the necessary agreements in this matter must be signed by 1800 hours, Tuesday, the 27th of November, 2018. Failure to implement this on the dot will attract decisive actions from me.”
ChimpReports has learned the contract with Ripple-nami is yet to be signed despite pressure from President Museveni.
Contacted, Finance Ministry spokesperson Jim Mugunga said, “There are ongoing efforts within various government departments to make sure its guidance is implemented within existing processes and in accordance with the laws.”
It remains unclear what percentage of the hidden tax the American company wants to take.
Pressed to shed more light on the steps undertaken by government to effect the presidential directive, Mugunga observed: “As you know there are various players on board due to its multi-sectoral nature. The ministry of finance is one of them. The other is URA, KCCA, Attorney General’s Office and several others. Aware that the proposed service provider is a private sector company, the processes and efforts included making sure the contracts are prepared and negotiated and that all interfaces to the contract are covered.”
It will be recalled that the foreign company will have access to taxpayers’ confidential data, including private properties and financial records of businesses.
“There are additional issues such as ICT equipment and Data protection issues which had to be managed and these are not easy to circumnavigate without due processes. What may seem as a delay today may prove worthy to avoid future protracted legal gymnastics that may derail the otherwise good proposal to enhance revenue collection,” said Mugunga.
On his part, Museveni said intelligence showed him that there was a “massive tax evasion in Uganda in OTT, telephone calls under-declarations, mobile money, rentals sources concealment etc. That is how we started making some moves that are already yielding big sums.”
Museveni now says the “mobile money tax is already bringing Shs 66bn in just one quarter, the OTT tax is bringing in Shs 12bn in one quarter in spite of some actors wasting their time by trying to hide in VPN where they spend much more money but we know who they are.”
Mugunga told ChimpReports the process of procuring the American company is being expedited but with caution.
“The president has in the past always advised technocrats to speed up processes to avoid costly delays and frustrating private sector partners, but he is also a strong advocate of the due processes to be followed in accordance with the law,” said Mugunga.
“I am aware that steady progress is being made to finalize this transaction expeditiously and in line with all governing laws,” he emphasized.