Wednesday, July 24News That Matters

Anti-Corruption Court Bites Hard in Landmark Ruling On VAT Fraud, Slaps Businessman With Shs1.4Bn Fine

By Keefa Nuwahereza

The Anti-Corruption Court on Friday convicted Leonard Alikiriza, the Managing Director of Nyaks & Lenny Enterprises Ltd and Leds (U) Ltd, on 6 accounts of making false and misleading statements to a Tax Officer, contrary to section 58 (1) (a) of the Tax Procedures Code Act, 2014 causing a tax loss of Shs497,397,982 in respect of LEDS (U) LTD and Shs1,980,032,566 in respect of Nyaks & Lenny Enterprises Ltd.

Alikiriza was jointly charged with Musisi Majidu, an agent of Xing Dongmin and Hongai on two accounts of conspiracy to commit a felony contrary to section 390 of the Penal Code Act Cap 120. The accused were however acquitted on the charge of conspiracy.

This was a VAT fraud case which involved transactions between the accused person’s companies (Xing Dongmin and Hongai) both being factious entities. The accused filed VAT returns purporting to have transacted with the two factious companies and claimed input tax credit on the basis of said transactions.

The prosecution presented 10 witnesses to prove its case and Court found that Alikiriza, as the Managing Director of both Nyaks & Lenny Enterprises Ltd, and Leds (U) Ltd, knowingly and recklessly made false and misleading statements claiming to have hired trucks from Xing Dongmin and Hongai to transport limestone from Karamoja to Tororo Cement judgement whereas not.

Alikiriza was accordingly sentenced to a fine of 150 currency points, 25 for each count or three years imprisonment in default for each account.

He was ordered to pay the taxes in respect of Leds (U) Ltd amounting to Shs497,397,982 and 50% of the taxes due in respect to Nyaks & Lenny Enterprises Ltd amounting to Shs990, 016,283; a total tax of Shs1,487,414,265, within six months from the date of judgement.

A revision application, seeking 100% payment of taxes due for Nyaks & Lenny Enterprises Ltd is to be filed.

Commenting about the victory, Patience T. Rubagumya, the URA Commissioner Legal Services and Board Affairs, said that; “This is a landmark win for the Uganda Revenue Authority (URA) in the fight against the vice of invoice trading which causes huge revenue losses.”

She added that “Great credit goes to our Tax Investigation Department for the thorough investigations and the unwavering dedication of the legal Services and Board Affairs team that enabled us to secure this conviction.”

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