National News

URA closes Observer newspaper over Shs2.9b tax

Kampala. Uganda Revenue Authority (URA) has closed The Observer newspaper over what officials say is Shs2.9b unpaid tax. 
Shortly before 4pm, three officials from the tax body stormed the Tagore Crescent, Kampala based offices with four armed guards. They ordered all the staff to stay in the premises and not remove any of their property. 

After a meeting that lasted about 40 minutes with The Observer management, the staff were allowed to move some of their property including vehicles before putting the premises under lock and key.

“There has been an MOU [Memorandum of Understanding] which was never fulfilled and there have been negotiations that have hit a snag,” Mr Ian Rumanyika, the URA manager for public and corporate affairs, told Daily Monitor in an interview.

Of the Shs2.9b, Mr Rumanyika said, Shs1.4b is for the Pay As You Earn (PAYE) tax which is charged on all employees earning a monthly salary income above the stated threshold as per the Income Tax Act. The balance is owed to the tax body in unpaid Value Added Tax .

“This afternoon, URA sealed off our offices in Kamwokya claiming that we have not met our tax obligations. The truth is we have been in several meetings with URA since December 2018, trying to settle the discrepancy between their figures and ours,” a statement by The Observer management reads in part. 

It adds: “There is also a miscommunication between the enforcement department and the domestic tax department. Our appeal and negotiations were not communicated. The enforcement department proceeded without being updated by the domestic tax department. We are in talks to see to it that this problem is sorted out as soon as possible.”
Sources at The Observer told this website that their tax troubles were escalated by a top official at the Ministry of Health who detailed their tax issues and threatened the management of the weekly newspaper with “action” if they don’t back off publishing stories from a book on the infighting in the Health Ministry.

Background
The threats, according to our source, were first issued on Friday last week, followed by another on Tuesday before the paper went to the press and one on Wednesday hours to the closure of the paper.

The 156-page book authored by Prof Anthony K. Mbonye details a litany of in-fighting and power struggles that led to his resignation as director general of health services in-charge of clinical and community health in January 2018.
On Tuesday The Observer led with the story “Doctor Reveals Rot in Health” with Prof Mbonye’s portrait on the cover. 
By press time, we could not independently verify if the aggrieved officials at the Health Ministry had acted on their threat or it was a coincidence that URA chose to act on the media house at the same time.

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