URA orders permits firm to pay sh5b

Mergers, Acquisitions and Financial Results

Face Technologies, the company which issues driving permits in Uganda, has not paid taxes in the past five years, the tax body has said. The Uganda Revenue Authority has consequently demanded over sh5b from the company in tax arrears, interest and penalties.

Face Technologies, a South African company, was contracted in 2003 by the Ministry of Works to design, print and supply computerised driving permits. “In execution of the contract, Face Technologies earns income from Uganda and also employs staff. Consequently, income tax, PAYE and VAT liabilities arise,” URA said in a statement.

An investigation, URA added, found that Face technologies did not pay any taxes in VAT, income tax and PAYE from August 2005 to September 2008. “As a result, URA under the law assessed and commenced enforcement actions to recover taxes owed by Face Technologies.”

The tax body added that the decision of the company to close their office in Mbale district was made in their individual capacity. According to URA, Face Technologies has been deducting PAYE from its staff without remitting it. URA then moved to recover the money from the company’s account in Stanbic Bank but it found only about sh100m which did not cover the total arrears.

Sources in URA said the contract for Face Technologies did not provide for any tax exemption. But a manager of Face Technologies, who spoke on condition of anonymity, said URA has been charging VAT on all driving permit applicants.

The manager added that under the Build, Operate and Transfer (BOT) arrangement with the Government, they had been charging applicants only to recover their initial investment before handing over the project to the Government.

Face Technologies, he said, has tried to talk to URA to reconcile their accounts but to no avail. They, therefore, decided to close all their up-country stations and might close the main branch if the matter remains unresolved. The company has offices in Jinja, Mbale, Kampala, Mbarara, Gulu and Fort Portal. They employ about 100 people.

On the issue of PAYE, Face Technologies says they remit all salaries to Unisis, their employment agency, which is responsible for the deduction and remittance of PAYE.

None of the employees, the source added, has a contract with Face Technologies, adding that they were recruited and employed by Unisis on behalf of Face Technologies.

Grace Itazi, the director of transport at the works ministry, said the company’s contract is being renewed every two years until it recovers its initial investment.

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