The Law Revision (Miscellaneous Amendments) Act 2023 which was assented to by the President on 10th May 2023 is a crucial learning point in Uganda’s legal landscape.
This Act provides for the repeal of specified acts that are now deemed obsolete and amends several
laws.
It covers a wide spectrum of laws including but not limited to the Evidence Act, Divorce Act,
Registration of Titles Act, Tax Procedures Code Act, and Income Tax Act, among others.
This Amendment flows from the powers of the Attorney General under Section 2(1) of the Law Revision Act 2020 to order the preparation of a Revised Edition of the Laws of Uganda which is done by the Law Reform Commission (LRC).
Section 2(2) of the same Act provides that a revised edition of the laws ought to be prepared every ten (10) years from the date of the last revised edition.
Section 10 of the Law Revision Act gives the LRC powers to omit laws that have been expressly repealed, renumber provisions, correct cross-references, correct grammatical and typographical errors, do all things relating to form and methods which, in his/her opinion are necessary or useful for perfecting the Revised Edition, among others.
When a provision is declared null and void and taken out of the statute book, a numbering gap is created and therefore the Acts have to be re-numbered and cross-referenced.
However, the LRC does not have the power to make any alteration or amendments to the substance of any enactment.
The Attorney General, Kiryowa Kiwanuka, in a New Vision article dated 24th June 2023 explained that the current edition of the Laws of Uganda was published in 2000 and that over the 22-year period, there have been a lot of amendments made to them.
According to him, the Act is intended to facilitate the process of preparing the revised edition of the Laws of Uganda by making amendments to the specified laws, where the amendment can only be effected using an Act of Parliament and is intended to correct the anomalies in related Acts.
Application
The Act is referred to as ‘miscellaneous’ because it lumps together various statutes and provisions for amendment and repeal.
While the Act has been assented to, the Attorney General is yet to issue a statutory instrument appointing a date on which the said Revised Edition shall come into force.
Nevertheless, the Law Revision (Miscellaneous Amendments) Act 2023 has a time frame. Once the revised edition of the laws is issued, the Act expires because it will have achieved its purpose.
Having given you a general insight into the Law Revision (Miscellaneous Amendments) Act 2023, I will pick out a few highlights from it that could have far-reaching effects on the tax legal regime in Uganda.
The Tax Procedure Code Act (TPCA) is one of the cornerstone Acts that regulate tax law in Uganda and as such any amendment made to it vitally affects the tax regime.
Section 28 of the Law Revision (Miscellaneous Amendments) Act introduces Section 14A to the TPCA. It
is however worth noting that an identical provision was previously contained under Section 6 the Finance Act (No.2) CAP 183 of 1994 which was repealed by the Law Revision (Miscellaneous Amendments) Act.
Section 14 A of the TPCA as captured under Section 28 of the Law Revision (Miscellaneous Amendments)
Act provides that:
1. Where a person carrying on any business liable to duty, levy or tax has been succeeded by another person and where the duty, levy or tax due and payable by the person succeeded cannot be recovered from him or her, it shall be payable by and recoverable by the person succeeding him or her.
2. If the person succeeding fails to pay the duty, levy or tax on the date fixed by the Commissioner
General, then the provisions of the law relating to the collection and recovery of duty, levy or tax shall apply to the collection and recovery of the amount due as if it were the duty or tax due and payable by the person succeeding.
3. Any person intending to discontinue any business liable to duty or tax shall give to the Commissioner General a notice of his or her intention thirty days before the date of discontinuance, and where the a person fails to give the notice required by this section, the Commissioner General may direct that a sum not exceeding ten currency points be recovered from that person by way of penalty.
Implications of the provision
a. Recovery from a successor
According to Section 14 A (1) and (2) of the TPCA, a person who takes over from another, in a business liable to tax, either by way of purchase or otherwise, will be liable to pay all taxes owed by his/her predecessor where URA fails to recover the tax from the predecessor.
Where a purchaser acquires a company as a going concern, the purchaser automatically inherits all its assets and liabilities and so in that case, this provision is subsumed.
However, where one acquires a business from an individual, the liabilities of the predecessor cannot shift to the successor because the successor was not liable to pay the tax at the time it was imposed.
One may acquire a business without any tax liabilities today but where an audit relating to prior years is conducted later and the business found liable, the successor will have to pay this liability despite discovering it in hindsight.
The law also makes the recovery of tax from the successor a second option after URA fails to recover the tax from the transferor which is flawed both in principle and in strategy. If the transferor is unable to pay tax that he or she lawfully owed, why does the law presume that URA will successfully recover the tax from the successor who has taken over the same business.
This provision therefore unfairly opens up a successor of a business to the risk of incurring tax liabilities in future arising from audits of periods long before the business was transferred to him or her.
b. Notice of Discontinuation
Section 14 A (3) introduces yet another fascinating provision that requires a person who plans to
discontinue his or her business to give the Commissioner notice that they plan to discontinue their
business within 30 days. Failure to furnish such notice gives the Commissioner the discretion to issue them a penalty not exceeding ten currency points.
The drafting style of this provision is unconventional in so far as it insinuates that a person who fails to issue the said notice to the Commissioner may or may not receive a penalty from the Commissioner General.
Certainty of taxes and penalties imposed on taxpayers is one of the vital canons of a good tax system
and this provision offends this canon because a taxpayer is not certain of the consequences of his/her action or inaction.
Secondly, it has been said that one of the purposes of the Law Revision (Misc Amendment) Act is to
correct anomalies in related Acts and yet Section 14 A(3) which imposes a penalty is not placed under Part XIV of the TPCA which contains all the penalties imposed under the Act but instead is placed after Section 14 of the TPCA which relates to Tax representatives.
One could argue that the Act could potentially create more confusion than order.
Overall, the Law Revision Miscellaneous Amendment Act is a rather novel instrument for amending laws whose efficacy will be judged by time.
