Uganda Scraps $75 Million MTN Tax Demand After Safaritech Assessment Deemed Frivolous
Uganda has annulled a back tax demand of 280 billion Ugandan Shillings (US$75.45 million) levied on MTN, following an assessment by the Kenyan consultancy firm Safaritech.
The move has ignited discontent among senior officials who had cautioned against employing the firm, citing parallels with a similar debacle in Ghana.
The back tax was dismissed after being deemed frivolous, echoing the experience in Ghana, where Safaritech was involved in a US$773 million (GHS8.2 billion) tax dispute with MTN.
That case also ended with the tax claim being written off, raising concerns about Safaritech’s practices, including its registration status and the methods by which it secured contracts. The firm, established by Kenyan tax expert Andrew Gathuo Chege, came under scrutiny in Ghana for its dubious operations.
In Uganda, Brendan Adiru Wadri, Head of Revenue Intelligence at the State House, had reportedly advised President Yoweri Museveni against contracting Safaritech, warning of its controversial track record.
Mr Wadri’s concerns were reportedly detailed in an extensive report to the President, which highlighted the firm’s checkered history in Ghana.
Despite protests from some of his advisers, President Museveni had sanctioned the involvement of Safaritech, swayed by assurances from the firm and its alleged supporters within the Uganda Revenue Authority (URA) that they could recover more than 1.5 trillion Ugandan Shillings (US$404 million) in undeclared taxes.
This scenario bears a striking resemblance to the events in Ghana, where the Ghana Revenue Authority (GRA) proceeded with a tax claim against MTN, despite warnings from internal stakeholders and a critical reassessment by KPMG. The GRA’s decision to move forward ultimately led to the dismissal of the tax demand.
The outcome in Uganda has now left the government empty-handed, with the unresolved revenue leakage issue still looming. Reports suggest that Brendan Wadri, frustrated by what she perceives as a mismanagement of the tax dispute, has tendered her resignation in protest.
