The penalty for not filing an individual tax return

Meddie and Judith pose for a pic after donating to Sanyu Babies Home - Photo by Nicholas Oneal

The creativity of a good tax lawyer determines how much an individual declares in taxes on their individual tax return, the accountant usually determines the accuracy of the figures. The failure to file individual tax returns and the ensuring penalties has and still is a thorn in the side of Michael Ezra Mulyoowa (please refer to the article titled Commissioner General, why didn’t you take Michael Ezra’s money ?).

Enter Meddie Sentongo, tycoon extraordinaire, handing over the keys of his luxury car to singer Jose Chameleon and later photographed with Judith Heard being charitable at Sanyu babies home in Kampala. There has been speculation in the Uganda newspapers about the source of Meddie’s wealth along with the hope that after showing off his wealth, he won’t end up with a hefty load of back taxes like Michael Ezra did.

Under the Uganda Income Tax Act, contributions to charities or other establishments however generous and philanthropic, do not waive the mandatory obligation of an individual to file an individual tax return on their chargeable income. Michael Ezra knows this very well. And the advice to simply hand one’s money over to charity in lieu of mandatory taxes brings to mind the word incompetent. An individual’s contribution to a charity is only a credit allowed to a tax payer on his or her chargeable income. And the penal tax for failure to furnish a return of income waives any credit as under section 151 of the Uganda Income Tax Act Cap 340. The penalty tax for failure to file an income return for a given year of income is 2% of the tax payable for that year before subtracting any credit allowed to the taxpayer on his or her chargeable income or ten currency points per month, whichever is the greater, for the period the return is outstanding.

Flamboyance is not a crime, but the showier one is, the higher the chances are of attracting a tax audit on the wealth being paraded. And there are a number of flamboyant business men and women in Uganda. One cannot blame the Uganda Revenue Authority for following the money, as their very existence is to collect what belongs to Caesar. An astute globe trotting businessman, however flamboyant, would read the source and residence rules himself, or get some help.


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