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Uganda Revenue Authority Freezes Makerere University Accounts Over 1BN Tax Debt

Makerere University lecturers and other staff may miss this month's salary after Uganda Revenue Authority (URA) froze the institution's bank account over sh1.1b tax arrears.

The account in the dfcu Bank at Makerere was frozen early this week, the university secretary, David Kahunda-Muhwezi, said.

"I got the information yesterday (Tuesday). This is the account where we deposit students' tuition.

We use the money to pay staff salaries, university utility bills and other things. But now it has been frozen, what shall we do?" Muhwezi wondered.

The sh1.1b arrears is tax which URA insists should be levied on the bursaries given to biological children of the university staff.

The biological children's scheme was started in 2002 to help academic and non-academic staff to educate their children at the university.

Under this scheme, staff members pay 50% of the tuition fees for their children, while the university meets the remaining 50%.

Only two biological children from every staff member qualify for the scheme each academic year. Currently, about 500 students are benefiting from this scheme.

Since the scheme was introduced in 2002, the university has not been remitting taxes because, according to Muhwezi, it was believed that bursaries are not taxable.

However, this year URA ruled that the university ought to pay the tax, including interest that has accrued on the tax since 2002.

"You are requested to effect payment of over sh1b in order to avoid further interest and enforcement measures," URA enforcement taxpayers' manager Christine Katwe said in a March 9 letter.

Muhwezi yesterday told New Vision that URA Commissioner General Allen Kagina had blocked the university's intention to appeal to the finance minister over the matter.

He wondered why URA insisted on taxing the biological children's scheme, yet it does not tax government scholarship schemes.

"The money spent on this scheme is not an allowance to staff. It is a scholarship. It was introduced because lecturers are poorly paid and could not afford tuition fees for their children," Muhwezi explained.

He, however, said the university was consulting with its lawyers on the possibilities of seeking legal redress.

By Francis Kagolo
The New Vision Newspaper
31 May 2012

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