When you buy any product or service from a VAT registered company, you are entitled to a Tax Invoice which you can use in your company accounts to claim VAT on input. As a communication and advertising company, airtime is our relatively big expense because communication and access to internet is essential for our business. That’s why, when I buy airtime, I always request for a Tax Invoice.
MTN Lugogo Shop is notorious for blatantly refusing to give a Tax Invoice to customers. They claim the system is down and sincerely, if your system that issues Tax Invoices is down each time I purchase airtime (I noticed the pattern at the beginning of this year) and you make me come back to the shop every day for weeks and only give me a Tax Invoice when you realize I will not give up…. Then how are you as a company, operating in Uganda for 16 years, accountable for VAT to URA?
Besides, all MTN agent and dealer shops that I had visited do not have proper documentation to provide MTN customers with a Tax Invoice. I have purchased airtime from dealers at Quality Hill Lubowa, Freedom City Entebbe Road, Lugogo and a few other places in the past and all they can give you is a Receipt. But this is not a valid Tax document.
Valid Tax Invoice must contain the following features: words ‘TAX Invoice’ or ‘Cash Sale’ have to be displayed; TIN number of the company; address and contact; date; signature of the person selling the goods or service; Customer’s name; Customer’s Tin number have to be entered.
MTN has nothing similar in any of the shops I had visited. This is after 16 years of operation and supposedly being Tax compliant?
As a principal with many agents, MTN is obliged by law to transfer their Tax Compliance obligations to their agents, meaning that if MTN is selling products and services that are subject to VAT, all their agents have to be either VAT registered or their VAT transactions administered by the principal.
This is how the scenario works: You are VAT registered and you do not issue Tax Invoices, therefore you can not declare those sales in your monthly returns. You can if you are honest but I don’t feel comfortable with the lack of systems in place because if you were honest you would be following the rule of law in the first place.
If you don’t declare huge amounts of airtime sales in your VAT returns, you obviously have to deal with the huge amounts of money you have collected but are un-receipted (because Ugandans are not in a habit of asking for a receipt and MTN does not volunteer any receipt to customers, ever).
At the end of the day MTN has many options, together with their dealers and super dealers, to hide this money if they so wish. What is your guess? My guess is that a lot of this is happening, with or without the knowledge of MTN top management. However if this is going on for sixteen years, everyone must know by now that something is wrong.
My mission is to stop further excuses and make MTN and other giants who are fleecing us of cash, understand that even though our country is disorganised and our politicians naive, greedy and largely ignorant, the general public is opening their eyes and becoming more and more vigilant. My campaign (currently on Twitter) should turn the eyes on UCC and URA as well and show us how they will handle this situation. I have not yet found the time to officially communicate this situation to the regulator and tax authority but I will, also thanks to you, because this rant will help me formulate my thoughts and sharpen my pencil.
The easiest solution right now is that MTN admits the error and pays penalties for non-compliance in the past 16 years and provides Cash Sale / Tax Invoice books to all their sales outlets so that customers can get their Tax Invoice on demand. Further, URA must consider compulsory registration of all businesses for VAT and installation of real-time VAT sale registrars at all business premises, so all transactions are receipted and immediately logged on the VAT portal.
This system was recently introduced in Tanzania (of all places) and it works perfectly well in most countries around the world including MTN’s native South Africa and this is one more reason for MTN Uganda to be ashamed of themselves for cheating Ugandans out of their VAT for all this time.
This is so reminiscent of Celtel in the late nineties who were doing the same but URA got them and put a stop to it. It would be interesting to check whether other Telecos issue VAT compliant receipts (Tax Invoices) on purchase of airtime. My guess is – no.
Editor’s note: This is a guest post from Nada Andersen, the MD at Star: Leo Advertising. She’s Ugandan, advertising, communication and behavioral management professional; fine artist and graphic design specialist. You can follow her on Twitter @NadaAndersen