The Uganda Revenue Authority (URA) has issued a tax demand to MTN Uganda, the prominent telecommunications company, for the payment of Shs 260 billion ($70.9 million) in outstanding taxes. This sum represents unremitted excise duty and Value Added Tax (VAT) that MTN Uganda collected on the government’s behalf over a five-year period but failed to transfer to the URA, according to a report by ChimpReports.
An insider source has indicated that the tax in question remains due, and it is now incumbent upon MTN Uganda to settle the amount. The source emphasized that the company is responsible for remitting all government-collected taxes and suggested that the government is open to negotiating a payment plan with MTN Uganda.
The demand follows allegations by MTN Uganda that the URA has resorted to ‘coercive tactics’ to recover the said amount through what the telecom company considers an ‘unfounded tax assessment.’ MTN Uganda has also accused URA officials of exhibiting ‘corrupt intentions’ in the tax dispute, a situation that MTN claims poses a threat to its financial stability.
In response to the president’s directive condemning tax evasion by major telecom firms, the URA contracted the Kenyan firm SafariTech in 2023 to conduct a tax compliance audit of the telecom sector. In September 2024, MTN Uganda reached out to David Kalemera, the Head of the State House Revenue Intelligence and Strategic Operations Unit, seeking his intervention in the matter and expressing concerns over the URA’s stance on the tax assessment.
Reports suggest that the tax assessment against MTN Uganda is based on unpaid taxes related to trillions of dollars worth of international and domestic phone calls. Initially, the tax liability was estimated at Shs 1.5 trillion ($409.1 million), but this was later reduced to Shs 260 billion after a more consistent interpretation of business rules during the audit.
MTN Uganda’s CEO, Sylvia Mulinge, has warned that if the tax assessment is upheld, it could have a severe impact on the company’s operations, its economic contributions, and the overall confidence of investors in Uganda. MTN Uganda has maintained that its revenues have been independently audited, are accurately accounted for, and are compliant with tax regulations.
Furthermore, a source claims that MTN Uganda has collected significant sums from various sectors of the population, including boda boda riders and rural residents, without remitting the appropriate taxes. The source criticized the government’s reliance on foreign loans for infrastructure development while domestic tax revenue from companies like MTN Uganda remains uncollected.
The source reiterated that MTN Uganda, as a tax collector for the government, must fulfill its obligation to remit the collected taxes. The situation remains unresolved as discussions between MTN Uganda and the URA continue.
