The cabinet has stopped Uganda Revenue Authority from demanding customer information held by financial institutions.
According the Minister of Information and ICT, Frank Tumwebaze, the minister of finance has been directed to advise URA against proceeding with the demand.
Tumwebaze was addressing journalists at Uganda Media Centre on cabinet resolutions. According the minister, URA’s demand was bound to cause unnecessary turbulence in the banking sector and thus affect the economy.
“Cabinet further discussed and noted the concerns that have been expressed by various stakeholders and the public regarding the demand by the Uganda Revenue Authority(URA) to access the personal accounts of allclients of Commercial Banks. Cabinet discussed the mater and with guidance of the Attorney General, recognised that while URA has theLegal 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 allpeople including those who are complying well and paying their taxes,” Tumwebaze quoted a cabinet resolution.
According to cabinet, URA should target accounts of individuals who are subject to their (URA’s) tax investigations as has been the practice. They also advised URA to work and coordinate with the Financial Intelligence Authority- another government statutory body mandated to monitor all financial inflows without having government interfere with the business of banks.
“The Minister of finance was accordingly directed to advise URA to drop its intentions of demanding for omnibus disclosure of people’s accounts from banks as this would cause unnecessary litigations and some turbulence in the banking sector and thus affect the economy,”Tumwebaze added.
The cabinets resolution comes after several groups protesting the same move.
The Uganda Law Society (ULS) is the latest group to express concern over the recent request by taxing body, Uganda Revenue Authority (URA), to financial institutions seeking customers’ details.
Through their chairman Simon Peter Kinobe, ULS argues that despite having a legal duty to collect taxes from all people eligible, URA is also duty bound to uphold the constitution of Uganda (1995) (as amended).
“We are aware of the provision of the provisions of the Tax Procedures Code Act, 2014 the empower the commissioner to require any person to furnish her with any information for the purpose of administering any provision of any tax law. However, we are of a considered view that this provision should not be implemented at the expense of the constitutional right of privacy enshrined in article 27 of the constitution,” Kinobe states in part.
He contends that the action by URA if implemented will destroy the core of the banking industry which has been built on bank-consumer confidentiality.
Ugandans in the diaspora through their umbrella body, Common League of the Uganda Diaspora (CLOUD) also protested the move.
Through a statement by their chairperson, Martin Byakuleka, members of CLOUD refered to the order by URA as an “outlandish and embarrassing development”.
“The URA request is technically preposterous, indication perverted managerial creativity and awkward imagination. Politically, the request is evidence of regressive governance capabilities, insensitivity to personal freedoms, arrogant disregard of citizen’s privacy, and a demonstration of absolute political indecency,” Byakuleka said.
In a reply letter from the Uganda Bankers’ Association to the commissioner domestic taxes, URA, banks also expressed unwillingness to comply unless a similar directive is issued by the Central Bank.
Wilbrod Humphreys Owor, the Executive Director Uganda Bankers Association in a letter dated March, 23 contents that the member banks have sought guidance from the regulator on the issue.
“We refer to your letter ref 1000024189 dated 16/2/2018, to all member banks regarding the above. Member banks have brought this matter to the attention of the regulator to provide guidance. In the circumstances, banks are constrained to act pending directions from the regulator,” Owor said.