BREAKING NEWS: MTN Writes to Kalemera over Shs 260bn Tax Dispute; Accuses URA of Coercion, Corruption

MTN Uganda has accused Uganda Revenue Authority (URA) of deploying ‘coercive tactics’ to extract Shs 260bn from the telecom in an ‘unfounded’ tax assessment.

MTN Uganda also blamed URA officials for exhibiting ‘corrupt intentions’ in the tax dispute, which, it said, threatened the financial stability of Uganda’s largest telecom.

ChimpReports has exclusively learned that MTN Uganda on September 30, 2024 wrote a strongly-worded letter to David Kalemera, the Head of State House Revenue Intelligence and Strategic Operations Unit, urging his intervention in the matter.

“We urgently seek your intervention regarding the Uganda Revenue Authority’s (URA) decision to uphold an unfounded tax assessment of Shs 260 billion against MTN Uganda, despite comprehensive evidence proving its inaccuracy,” wrote MTN Chief Executive Officer, Sylvia Mulinge. 

“This assessment appears to be an intentional effort to compel MTN to take the matter to the Tax Appeals Tribunal (TAT), which would require an immediate payment of 30% of the assessed amount (Shs 78 billion),” Mulinge observed, adding, “This coercive tactic is not only fundamentally unjust but also raises concerns about corrupt practices within the URA.”

Officials told ChimpReports that URA’s assessment was based on information supplied by a controversial Kenyan consultancy firm known as SafariTech.

SafariTech officials reportedly promised analysis which URA would use to recover Shs 1.5tn from MTN in undeclared taxes over the past five years.

The Kenyan firm would take 5% of the Shs 1.5tn recovered from MTN.

Indeed, SafariTech came up with its findings showing MTN had not declared Shs 1.5tn, stunning the telecom body’s top shots. 

During intense meetings between the telecom’s lawyers and URA, the source of SafariTech’s data and tax assessment models were queried. 

It also was established that SafariTech did not use official government data collected from telecom transactions, be these calls, mobile money, or data exchanges.

The Ugandan government runs a data center in Lubowa, off Entebbe Road, which collects, in real time, accurate data from all telecom transactions to support telco market regulation, tax collection, monetary policy planning, banking supervision, and national security reinforcement.

Mulinge’s letter

Mulinge told Kalemera that, “After a series of extensive engagements where MTN demonstrated, with uncontroverted evidence, that the original assessment of Shs 1.5 trillion was baseless, URA agreed to adjust the figure to Shs 260 billion on June 28, 2024. This adjustment followed meetings where the reconciliation of data and facts were carefully examined.”

It is understood that the Shs 260bn tax assessment was also contested due to several errors, omissions and negligence on the part of URA and SafariTech. 

However, said Mulinge, URA has insisted that MTN pays the assessed tax. 

“This unjustified assessment is a deliberate attempt to force MTN into the Tax Appeals Tribunal process, which mandates the payment of 30% of the disputed amount as a prerequisite for appeal,” said Mulinge in a letter to Kalemera.

“This approach serves no purpose other than to extract funds from MTN under duress and without just cause, a move that threatens to undermine our financial stability and goes against principles of fairness, transparency, and due process,” she added.

Mulinge further said, “such behavior by a public authority is a blatant abuse of power and reflects corrupt intentions to exploit legal frameworks for unwarranted financial gain.”

The MTN Uganda top executive added: “It is unacceptable for URA to employ such tactics against Uganda’s largest taxpayer, which contributed over Shs 200 billion in income tax and collected approximately Shs 1.1 trillion on behalf of the government in 2023. This not only puts MTN at risk but also endangers the confidence of other investors in Uganda’s commitment to creating a fair and reliable investment climate.”

Efforts to reach Kalemera were still futile. An aide said he was attending a meeting. 

But sources disclosed that Kalemera has been conducting an investigation into the matter over the past few weeks. 

Over the last one month, ChimpReports has failed to obtain a comment on the raging tax dispute from URA’s new spokesperson, Robert Kalumba.

Kalumba last month told us he was “trying to get that information and when I do I will definitely get back to you.” He had not done so when we posted this article this Tuesday afternoon. 

Consequences 

Mulinge said the consequences of URA’s actions are grave. 

“If this assessment stands, it will significantly impact MTN’s operations, limit our ability to contribute to the economy, and jeopardize investor confidence in Uganda. This behavior from a government agency sends a clear message that even the most compliant taxpayers are vulnerable to arbitrary and exploitative actions, which is detrimental to the country’s investment appeal,” she emphasised. 

In 2020, MTN Uganda was forced by the government of Uganda to pay$100m (Shs 370bn) to renew its operating licence that expired in October 2018.

 The Uganda Communications Commission (UCC) had approved $58m in license renewal fees. President Museveni questioned this amount, prompting UCC to revise it to $100m.

MTN Uganda strongly urge the State House Revenue Intelligence and Strategic Operations Unit to intervene immediately. 

“Your involvement is crucial to preventing the abuse of legal processes and ensuring that URA operates within the bounds of fairness, transparency, and professionalism. It is imperative that the integrity of Uganda’s tax administration system be upheld to maintain investor confidence and protect the country’s reputation as an attractive investment destination. We respectfully request that you take decisive action to halt URA’s attempt to coerce MTN into an unwarranted TAT process, thereby ensuring that tax matters are resolved based on evidence, due process, and respect for the law.”