TAXMAN MAR 2018

22
SPOT LIGHT
- VAT FRAUD
By the Tax Investigations
Department Team
Qn. 1: What is VAT fraud in
respect to the campaign you
have embarked on?
VAT fraud manifests in various
ways and tax compliance
teams within Domestic Taxes
(DT), Tax Investigations (TI)
and Customs are at the fore
front of ensuring compliance
to the requisite statutory
obligations.
The campaign kick started
by TID, seeks to tackle a
particular type of VAT fraud
where scrupulous persons
target the VAT mechanism
by introducing fictitious or
falsified transactions in their
VAT returns. This type of
fraud is also known globally
as Missing Trader fraud simply
because fake companies or
nonexistent taxpayers are
fraudulently used to generate
the fictitious invoices.
The invoices are introduced
in their business purchaserecords
with the sole purpose
of illegally reducing the
rightful VAT payments.
The bogus invoices, are
meant to illegally reduce the
VAT payments registered
taxpayers/institutions are
supposed to comply with.
Qn. 2: How grave is the vice?
Investigations carried out
by TID on 48 taxpayers
between 2015 and 2017 led
to assessments of UGX 60.4
Billion shillings arising out of
undeclared tax.
Our intelligence has now
established additional
taxpayers involved in this
fraud and we estimate that
fake invoices worth over UGX
100Bn in input VAT have
been illegally introduced in
taxpayers returns from 2014
to date. All these liabilities
attract heavy interest and
penalties in accordance
with the tax laws, including
possible prosecution of the
persons involved.
Qn. 3: What preventive
measures has URA put in
place to ensure that the vice
is dealt with?
Investigations have been
instituted into this fraud and
as part of these reviews, a
VAT fraud campaign has also
been launched. Taxpayers
have been notified through
various media channels to
verify their business records
and use this opportunity to
self-correct anomalies in their