- Proposed amendment of Section 19B
The principal Act is proposed to be amended in section 19B by inserting immediately after subsection (6) the following—
“(6a) A person who makes an unauthorised interference to, or tampers with, a digital tax stamps machine commits an offence and is liable, on conviction, to a fine not exceeding one thousand five hundred currency points or imprisonment not exceeding ten years.”
Implications/Comments
This proposed amendment targets manufacturers of gazetted products are implicated in tampering with DTS machines.
- Proposed amendment of section 39 of principal Act
Section of 39 of the principal Act is proposed to be amended by inserting immediately after subsection (3) the following—
“(4) For the avoidance of doubt, where interest due and payable under a tax law as at 1st July, 2017 exceeds the aggregate of the principal tax and the penal tax, the interest in excess of the aggregate is waived.”
Implications/Comments
This harmonises the capping of interest across the different tax legislation that was introduced in 2017.
- Proposed insertion of section 40D to principal Act
The principal Act is proposed to be amended by inserting immediately after section 40C the following—
“40D Waiver of interest on payment of principal tax
(1) The Commissioner shall waive the payment of interest and the penalty by a taxpayer, where the taxpayer voluntarily pays the principal tax outstanding at 30th June, 2023, by 31st December, 2023.
(2) The Commissioner shall waive the payment of interest and the penalty by a taxpayer on a pro-rata basis, where the taxpayer voluntarily pays part of the principal tax outstanding at 30th June, 2023, by 31st December, 2023.”
Implications/Comments
This proposes a waiver of interest and penalty for taxpayers who comply by paying their principal tax. This proposal raises a number of issues:
- As a result of the manner in which URA applied the waiver of penalty and interest under Section 40C, the principal tax remains in dispute. This is exhibited in K-Files v URA TAT No 69 of 2021 which held that URA was misapplying the waiver under Section 40C by misinterpreting Section 38 of the Tax Procedures Code Act. This amendment does not cure the controversies arising from this misapplication of 40C. An amendment that provides for proper application of Section 40C is more appropriate.
- Frequent waivers will likely have a negative impact on tax morale in the country. Taxpayers will be discouraged from being compliant.
- Proposed amendment of section 42 of principal Act
Section 42 of the principal Act is proposed to be amended by inserting immediately after subsection (3) the following—
“(4) Where a taxpayer fails to provide the information requested under this section, the taxpayer shall not be allowed to provide that information at objection to a tax decision or during alternative dispute resolution procedure proceedings.”
Implications/Comments
This proposed amendment attempts to deny a taxpayer the right to provide information at objections that was not provided during an investigation. This proposed amendment raises constitutional challenges as it would deny a taxpayer a fair hearing at the stage of objections or Alternative Dispute Resolution.
It is unclear what such a provision would achieve. Tax should be based on facts which may be proven by documentation regardless of when it is submitted. If new documentation is available at the stage of objections it is unclear why URA would choose to reject it if it clarifies the taxpayer’s true tax position. If implemented it would essentially result in URA collecting illegal taxes not properly owed by the taxpayer simply because they have been denied the right to present documentation reflecting their tax position.
- Proposed insertion of section 62H of principal Act
The principal Act is proposed to be amended by inserting immediately after section 62G the following—
“62H. Fixing tax stamp on wrong goods, brand or volume
A taxpayer who fixes and activates a tax stamp on a wrong good, brand or volume other than a good, brand or volume for that tax stamp commits an offence and is liable, on conviction, to a fine not exceeding five hundred currency points or imprisonment not exceeding three years or both.”
Implications/Comments
This penalises a taxpayer who fixes and activates a tax stamp on a wrong good, brand or volume other than a good, brand or volume.
