Chinese Firms Evading Ugandan Taxes, Says URA

May 28, 2018 Taxation in Uganda

Ugandan ShillingsKAMPALA – The Ugandan tax authorities are drawing attention to the scale of the tax evasion committed by Chinese businesses operating in the country.

The Uganda Revenue Authority (URA) recently published a list of companies which are understood to be engaged in VAT fraud, noting that a significant portion of the companies is made up of Chinese firms.

The URA has estimated that between 2015 and 2017 the actions of VAT evaders resulted in a loss of UGX 200 billion in tax revenues.

So far the government has recovered UGX 60 billion in lost tax revenues from the tax evading companies on its list.

The URA’s list contained 148 companies, with 93 being operated by foreign interests, and at least 90 of those being from China.

The listed businesses are accused of issuing fake invoices for transactions that never took place, thereby using the arising expense to circumvent their VAT obligations.

Authorities are now concerned that the foreign-run businesses are not only evading their taxes, but also neglecting to meet the funding requirements applied to all foreign firms.

Under current Ugandan law, foreign investors are required to invest approximately UGX 370 million in the business in order to be granted to licenses necessary to do business in Uganda.