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The Tax Appeals Tribunal has faulted Uganda Revenue Authority (URA) for failing to provide evidence showing a Shs 1.1 billion tax assessment against Premier Recruitment Limited noting that it is the Respondent who must provide evidence showing that tax is payable.
Following an audit by URA that reclassified facilitation payments including funds for passports, medical exams, training, and air tickets as taxable earnings, the authority subsequently assessed Shs 1,139,728,993 in PAYE and withholding tax, arguing that Premier Recruitment acted as either the employer or tax agent for the foreign companies that hired the workers.
Premier Recruitment contested the claim, asserting that the payments were reimbursable costs, not wages.
The Tribunal nullified the assessment, ruling that the company was not liable for Pay As You Earn (PAYE) and withholding tax on facilitation payments made to migrant workers.
The firm is owned by businessman Rajiv Ruparelia, son of real estate tycoon Sudhir Ruparelia.
In its decision issued recently, the Tribunal chaired by Crystal Kabajwara, with members Siraj Ali and Christine Katwe, concluded that the facilitation payments were not taxable income and that there was no employer-employee relationship between Premier Recruitment and the migrant workers it deployed abroad.
The company explained that under its agreements with migrant workers, it temporarily advanced facilitation fees that the workers were contractually required to refund before departing Uganda. The funds were not income, but logistical support to enable workers to meet pre-deployment requirements.
The Tribunal agreed, stating that: “The facilitation was not an economic gain or benefit to the workers; it was a recoverable advance.”
It further held that Premier Recruitment’s role was limited to recruitment and placement, and that the actual employment contracts were between the workers and the foreign companies abroad.
URA had also argued that Premier Recruitment had a legal duty to withhold tax on behalf of non-resident employers but the Tribunal found no legal basis for this position, ruling that there is no provision under the law that places an obligation on a recruitment agency to withhold tax on behalf of a non-resident employer.
The Tribunal allowed the application in full, setting aside the Shs 1.1 billion tax assessment and awarding costs to Premier Recruitment.
The post URA FAILS TO PROVIDE EVIDENCE AS TAX TRIBUNAL TRASHES SHS 1.1 BILLION PAYE CLAIM AGAINST RAJIV RUPARELLIA’S PREMIER LABOUR EXPORT FIRM appeared first on MK Newslink.