Airtel-Warid buyout Attracts exhorbitant $10m worth of Taxes: URA Commissioner General gets engaged in a furious legal battle

Just when we were still enjoying the grand Wedding party of the two Telecom Giants in Uganda, the unavoidable happened.  URA the county’s Tax collecting body  is demanding Shs27bn (over $10m) from the notorious deal– and the Commissioner General herself  Allen Kagina is now engaged in the legal battle.

According to the investigator, the tax assessment number is given as 002/2013 and it’s on URA file number 1002283198. The assessment was prepared by one Fred Kalyango and checked by Joseph Kateregga, URA’s Commissioner in charge manufacturing tax under the Large Tax payers Department.

According to the May 14, 2013 Income Tax Assessment notice to Warid, the total amount that Commissioner General Kagina demands from Warid stands at Shs27,145,280,975. ($10m)

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The tax is in relation to “Income Tax on the gain from the disposal of shares in Warid Telecom (U) Limited to Airtel (U) Limited under Section 95(4) of ITA (Income Tax Assessment).

Warid disagrees

Warid’s owner sold out to embark in the oil exploration, and has sued the tax body in order to side step the tax levied. The company’s lawyers have already filed a case at the Commercial Section of the High Court, seeking for an order that the sell-out to Airtel tax exclusive.

Briefly, Warid argues that URA drifted to hold that “the conversion of the shareholder loan into equity was a trick to avoid paying tax on the sell-out.” Warid argues, that the conversion was a mandatory condition of sale and a normal business practice, that was unavoidable for the success of the deal.

From the document obtained by the investigator, “Warid seeks a declaration that since the disposal of shares gave rise to a capital
loss, no tax on capital gains is payable,URA’s computation of the capital gains tax should not have arisen”.

The tax body summoned

Based on the summon given to the tax body, two days back, the Tax body’s Commissioner General is required to file her defense within 15 days, and in breach of the summon will lead force the court to rule in Favor of the fallen telecom giant.