Why cabinet blocked URA’s demand to access bank accounts
Uganda Revenue Authority (URA) found itself on the receiving end of a cabinet rebuke for its overzealous ambition of accessing bank details of all depositors in commercial banks.
Ordinarily, the tax collectors expected the support of government since URA’s demand was intended to enhance government’s revenue collections.
To the contrary, the tax body’s move annoyed the executive to the extent that President Yoweri Museveni questioned where URA commissioner general Doris Akol got the authority to make such a directive without his authority.
This was after Finance and Economic Planning minister Matia Kasaija asked for cabinet’s guidance on the matter that had not only put URA on a collision path with commercial banks but had also attracted wide condemnation from the public.
Kasaija told cabinet that URA had not consulted him despite being its political supervisor and at the end of the cabinet meeting at State House Entebbe, the executive had rescinded URA’s directive.
“The Attorney General told us that it would be challenged in court because banks have a mandate to protect their customers’ confidentiality,” ICT and National Guidance Minister Frank Tumwebaze told journalists at the Uganda Media Centre in Kampala on Tuesday.
“Cabinet discussed the matter and with guidance of the Attorney General, recognised that while URA has a legal mandate to access any person’s bank account for purposes of tax audit and assessment, it should not be a blanket and general application to all people including those who are complying well and paying their taxes” Tumwebaze added.
In a March 16 letter from Henry Saka, the Commissioner for Domestic taxes, URA demanded banks surrender their clients transactional details from January 1, 2016 to December 31, 2017.
The banks were also required to submit their clients Tax Identification Numbers (TIN), address, telephone number and email addresses.
The banks vehemently opposed URA’s demand fearing facing legal battles from their clients if they go ahead to share their account details.
The banks under their umbrella organisation, Uganda Bankers Association (UBA) went ahead and filed a petition on April 6 at the Constitutional Court, challenging the legality and constitutionality of URA’s move.
According to Tumwebaze, cabinet considered the possibility of hurting the economy by scaring away investors.
“It was creating uncertainty in the economy and that would force investors to take their investment elsewhere,” Tumwebaze said.
Cabinet therefore advised URA to work and coordinate with the Financial Intelligence Authority (FIA) to monitor suspicious accounts.
“They [URA] are empowered under the law to monitor any account of their interest if there is suspicion of tax evasion. Cabinet is of the view that they can work with FIA to monitor any suspicious inflows and outflows of money but not make an omnibus demand to access everyone’s bank details,” Tumwebaze said.