The High Court in Kampala has, in a ruling, declined an application by Capital Shoppers Limited, Quality Uganda Limited, Kenjoy Enterprises limited, Jazz Supermarkets Limited and Mega Standard Supermarkets Limited seeking to block the implementation of a selective roll out of the Electronic Fiscal Receipting and Invoicing solutions, the project was set to commence in July 2020.
Electronic Fiscal Receipting and invoicing system allows one to safely, and at no cost issue electronic tax documents and check their validity, by logging into the system or Uganda Revenue Authority (URA) web portal.
The system captures sales and transactional details are captured in the seller’s system invoicing system, encrypted and transmitted to URA in real time to generate e-receipts and e-invoices. The system encourages record book keeping and real time authentication of business transactions.
Pilot study
The dispute came after URA wrote a letter to Quality Uganda Limited and other selected super markets informing them of their decision to implement electronic fiscal devices across business spectrum, they had selected the aggrieved businesses as a pilot study.
The Applicants on 25th May, 2020 wrote to URA objecting the selective implementation and appointment as pilot candidates for the pilot exercise on grounds that there was no clear legal basis or appointment as pilot candidates and lack of an implementation strategy.
URA later on gazetted Tax Procedure Code (E-Invoicing and E-receipting) Regulations, 2020 and General Notice 595 of 2020 designating all Value Added Tax registered tax payers as mandatory users of this electronic system.
URA maintained that the law under the Tax Procedure Code mandates them to use a centralized invoicing and receipting to monitor and manage the issuance of fiscal documents for purposes of efficient tax administration
Airtel Africa and SpaceX Announce Strategic Partnership to Launch Starlink Direct to Cell Connectivity Across AfricaDeclining the grant of the temporary injunction, court presided over by Justice Ssekaana ruled that since the applicants were all registered VAT registered and General Notice 595 of 2020 was already gazetted, the aggrieved entities were already bound to abide by the law to issue electronic receipts or electronic invoices or employ electronic fiscal devices.
The Judge in reaching his decision reasoned that the public interest considerations would justify the refusal to grant a temporary injunction and public interest should prevail over the private rights” Ssekaana ruled.
The main application is still in court and awaits determination.
What Electronic Fiscal Receipting and Invoicing Solutions mean for Business
The system recently introduced by the Tax man is designed to improve business efficiency and reduce the cost of compliance through improved record keeping among tax payers and mitigate tax administration shortfalls while promoting efficiency. This will assist URA to address challenges of suppression of sales, non-issuance of tax receipts or invoices, it will also curb false refund claims, fictitious purchases and unverifiable claims by tax payers due to loss of records.
The implementation of the electronic system could see many businesses resort to computerized business models, this means investing heaving heavily in the purpose of related hardware and software.
This comes at a time when URA is set to introduce another electronic system for monitoring collection of Rental Tax in Uganda.
