URA SAGA: Banks Challenge Tax Law

29 commercial banks under the auspicious of their umbrella body the Uganda Bankers Association have filed a constitutional petition challenging a move by tax collector Uganda Revenue Authority (URA) to demand customer information.

The petition in which the Attorney General and URA have been attached as first and second respondents respectively,   stems from a March 16 letter by the URA’s commissioner of Domestic Taxes, Henry Saka. Therein Saka asked all the commercial banks in the country to provide information on all account holders from January 1, 2016 to December 31, 2017.

In the request, the banks are supposed to avail records of their clients, including the account name, Tax Identification Number (TIN), National Identification Number (NIN), address, telephone number and email addresses to the tax collector.

The other requirements asked by URA include total cash deposits in the respective accounts for the period starting January 2016 to December 2017 and total cash withdrawals from those accounts over the same period.

Citing section 42 of the Tax Procedure Code Act, the tax body asked the commercial banks to furnish it with the current balances on that account as of theas of the time of request.

But in their petition, the bankers assert that sections 41 and 42 of the Tax Procedure Code (TPC) Act, 2014 are inconsistent with and contravene Articles 27 (2) and 28 of the Constitution.

“The notices dated 16th March 2018 in relation to the bank financial institutions, and the 19th March 2018 in relation to the Nin-Bank financial institutions and the guidance thereon dated the 28th and 29 the march 2018 all issued by the second respondent purportedly pursuant to section 42 of the TPC Act, and addressed to each of the managing Director of the first to 30 petitioners,” the petition states, “And each of them  to furnish  to the second respondent details of all banks accounts held by them for the two year period of First January 2016 to 31 December 2017 are inconsistent with and contravene article 27 (2) of the constitution read together with articles 2, 20 and 43 (2)(c) of the constitution.”

Through AF Mpanga Advocates and MMAKS Advocates, the banks insist that the details of the said bank accounts sought by URA constitute the bank account information of the entire Uganda Bank sector  which according to them is subject to the constitutionally protected right of privacy of the account  holders guaranteed by article 27 (2) of the constitution.  Additionally, they have stated that giving out such details would be in violation of the of the banker- customer contractual duty of confidentiality.


“That whilst the petitioners recognize the article 17(9) constitutional duty of citizens of Uganda to pay taxes, the second respondent’s  (URA ) statutory  mandate to collect the said taxes and the legitimate  public interest in tax collection sections 41 and 42 of the TPC[ Taxation Procedure Code] Act contravene and are inconsistent with the provisions of the constitutions,” the petition partly reads.

They further charge at section 41(7)(a) of the Taxation Procedure Code (TPC)  on grounds that it purports to nullify any law relating to privilege which include, but is not limited to the privilege against self-incrimination and legal professional privilege, which they say is a derogation from the right  to fair hearing enshrined in article 28 of the constitution.

“The provisions of section 41 [of the TPC] give the second respondent [URA ] unfettered  powers to access premises, records and data storage devices without any reasonable judicial, administrative or democratic supervision or safeguards ; infinite powers that impair the right to privacy enshrined in article 27 (2) of the constitution in a manner that far exceeds what is necessary to accomplish the objective of tax collection and is accordingly beyond what is acceptable and demonstrably justifiable in a free and democratic society contrary to article 43(2)(c) of the constitution,” the petition goes on.

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