The Uganda Revenue Authority (URA) has issued a demand for Shs 260 billion ($70.9 million) from MTN Uganda, claiming the telecom company owes the sum in unpaid excise duty and value-added tax (VAT) collected on behalf of the government over the last five years.
According to a source within the URA, these taxes were collected from consumers by MTN on behalf of the government but were never paid to the state. “This tax is not related to corporate income; it’s excise duty and VAT that MTN Uganda collected but didn’t remit,” the source explained, stressing that the company is now required to meet this obligation.
The URA’s move comes amid a broader government effort to ensure tax compliance in Uganda’s telecom sector. The demand has drawn attention as it represents a hard-line stance on tax collection, reflecting the government’s intention to tighten controls over large corporations.
A URA insider emphasized that MTN must repay the funds: “They have been holding onto this money; it’s time to pay it back. Whether they spread it out or pay in lump sum is for them to decide. The government, however, is ready to discuss a payment plan.”
In response, MTN Uganda has strongly contested the URA’s tax assessment, accusing the authority of using aggressive tactics to enforce payment. The telecom company claimed that the Shs 260 billion tax demand is “unfounded” and based on misinterpretations of tax audits.
MTN Uganda CEO Sylvia Mulinge expressed concerns over the potential impact of this tax burden on the company’s operations. “This tax, if upheld, would place an enormous strain on our financial capacity and weaken our ability to contribute to Uganda’s economic development. It also risks undermining investor confidence,” Mulinge remarked, pointing to the potential ripple effects on the business environment.
This clash between MTN and the URA has its roots in 2023, when Uganda’s President Yoweri Museveni publicly called for a crackdown on tax evasion by large telecom firms. Following this directive, URA enlisted the services of SafariTech, a Kenyan auditing firm, to scrutinize the tax records of telecom operators, leading to the current assessment.
Initially, URA had assessed MTN’s unpaid taxes at a staggering Shs 1.5 trillion ($409.1 million), largely based on unremitted taxes from international and local phone call revenues. However, after further audits and consultations, the figure was reduced to Shs 260 billion.
Despite this reduction, MTN continues to dispute the claims. In a letter to David Kalemera, head of the State House Revenue Intelligence and Strategic Operations Unit, MTN sought intervention, calling for a review of the URA’s assessment. MTN maintains that it has adhered to tax laws, and its revenues have been subject to independent audits confirming compliance.
The tax dispute has also sparked public debate, with questions raised about MTN’s financial practices. Critics argue that MTN has collected vast sums from its customers—ranging from urban professionals to rural boda boda riders—without fulfilling its duty to pass on the corresponding taxes to the government.
A source familiar with the situation questioned why the government would resort to borrowing from foreign lenders for infrastructure projects while local companies like MTN allegedly withhold tax payments. “MTN collects taxes on behalf of the government, but they’ve been keeping this money. Now, they need to return what they owe,” the source noted.
As Uganda’s leading telecom company, the outcome of MTN’s tax standoff with the URA could have far-reaching consequences. The resolution of this case is likely to set a precedent for how tax disputes in the telecom industry are handled in the future, as well as shaping investor perceptions of Uganda’s regulatory environment.
For now, MTN Uganda faces the challenge of addressing the Shs 260 billion tax demand, while the URA remains steadfast in its pursuit of the outstanding amount. Both sides are waiting to see how this high-stakes dispute will unfold.
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