Inside medical stores’ UGX5 billion wrangle with URA

The National Medical Stores has dragged Uganda Revenue Authority over UGX4.9 billion unpaid VAT refund that the tax collectors insist NMS does not deserve.

National Medical Stores (NMS) has sought the intervention of a tax appeals tribunal in its standoff with Uganda Revenue Authority (URA) over UGX4.9 billion tax refund.

NMS says it has been pushed to the wall and has no alternative but to seek a professional arbiter’s intervention, arguing that the tax collectors want to pay less than half of what they owe as tax returns for zero-rated goods.

NMS says that, like a rich miser, URA has acted stingy, but the tax collectors are adamant that they are merely following the due process in not only stalling on paying out the tax refund but also paying only UGX1.3 billion of the UGX4.9 billion the medical stores is claiming

In a Tax Appeals Tribunal case number TAT 33/2017, the two parties are dragging one another by collar over contentions related to the period for tax refund.

Medical supplies, including drugs, are often zero-rated goods. However, VAT taxes are usually part of the price of the medicine. The VAT on zero=rated goods are always refunded by the tax collectors.

Whereas NMS claims it has applied for tax refund for period between 2013 and 2017, the tax collectors are adamant it is 2016/17 period for which it owes NMS in returns.

“The issue with the tax management audit is that whereas URA agrees to the refund, it only acknowledges claims to a tune of UGX1.3 billion. NMS should go after its suppliers and have them file tax returns which will help reflect the total amount,” URA said.

But Peter Kawuma, the lawyer for NMS, said a letter from URA tax audit management stating that his client had not agreed to the claim but only to a tune of UGX1.3 billion only supported claims by the medical stores.

“And when you claim NMS suppliers had not filed returns, it is akin to asking the medical stores to be under obligation to monitor its suppliers. That is not how it works,” Kawuma added, pouring cold water on URA’s effort to demand that NMS produces tax returns from its suppliers.

Before the tax appeals tribunal this week, Kawuma reminded URA that amount in question keeps accumulating.

Although URA did not refuse to pay the refund, the tax collectors argue that the application was for a cash payment, which it opted to offset to a later date as the law only allows it to pay within 30 days after which pending clearance is offset.

Meanwhile, he Tax Appeals Tribunal noted that, after discussion with both parties, the issues for determinations were whether NMS was entitled to a VAT refund as of July 2017 and which remedies were available.

“It is the opinion of this tribunal that an audit is carried out on the tax refund claims and the audit report would help resolve the contentious issues,” the tribunal said.

The two parties agreed to have an audit carried out.

The parties have been tasked to file a joint trial bundle and the matter was adjourned to April 12.