Three Indians who are directors of Wellex Hardware Limited led by Jigar Chandarana were convicted by the Anti-Corruption Court in Kololo for generating and selling fictitious invoices.
They were convicted on 5 counts of making false statements to a tax officer contrary to Section 58(1) (a) of the Tax Procedures Code Act, 2014.
Each of the accused persons was sentenced to a fine of shs 20,000,000 or to face Five (05) years imprisonment in default.
Accordingly, URA’s lawyers were able to secure shs 102,878,055 in taxes which Wellex Hardware Limited agreed to pay fully as assessed.
According to our sources, investigations into the tax affairs of Wellex Hardware Limited commenced in 2022 after URA’s intelligence received information about an Indian businessman that was suspected of trading tax invoices among different companies that registered for VAT purposes.
The available information further indicated that the directors of Wellex Hardware Limited were at the top of this syndicate where they made sales to their clients/consumers but generated and sold a number of tax invoices to beneficiaries for a commission.
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However, it is also revealed that the directors oftenly declared these fake invoices as output VAT in the period between 2018-2022 till their criminal activities were ended by URA’s tax investigations team.
Some of the beneficiaries of this tax crime syndicate include China Railway No.3 Engineering Group Ltd (CR3) a wholly owned subsidiary of China Railway Group Limited, one of the biggest construction enterprises in the world.
The company is also ranked among the Fortune Global 500 and is listed on the Shanghai and Hong Kong stock exchanges.
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It is stated that China Railway No.3 Engineering Group Limited claimed input VAT of shs 211,869,259 from fictitious purchases of shs 1,117,051,439 and thus causing revenue loss to the government of Uganda.
The URA Commissioner of Tax Investigations Denis Kugonza has often called out taxpayers to be on high alert and distance themselves from dealing with such unscrupulous individuals.
According to Kugonza, tax fraud occurs when a business or an individual willfully and intentionally falsified information of the tax return in order to reduce tax liability. He also notes that some of the most abused tax scams URA is dealing with is Invoice trading also known as missing trader.
Their involvement in these kinds of tax fraud schemes has consequences to not only the unsuspecting taxpayers, but on the entire economy.
WHY URA ENDED UP AT AGAIN?
In a shocking move, top officials from the Domestic Tax Department were seen at Winworld Group and this was confirmed by the Taxe body which has since raised concerns among the public who have since questioned the gesture under which URA bosses ended up visiting the convicts.
‘’ Winworld Group employs 600 Ugandans directly and nearly 4000 Ugandans indirectly and recycles nearly 250mt of plastic wastes every month’’, reads a post on the URA twitter account posted at 8:12 PM June 15, 2023.
Another post reads; ‘’ The Commissioner Domestic Taxes, Sarah M. Chelangat @SMChelangat with a team from the Large Tax Payers Office yesterday visited Winworld Group of Companies as a good gesture in return for their high voluntary tax compliance throughout FY2022/23.／1’’.
A section of Ugandans also claimed that the culprits who are likely to be deported ,were under assessed and they wondered how URA ended up negotiating with them despite the plenty of evidence of causing financial loss to the government.