TAX FRAUD! After Wellex, URA now goes after Hoima’s Kingstar Hardware Indians over selling fictitious invoices
In a bid to fight tax fraud, URA’s long arm has now caught up with Indian bosses at Hoima’s Kingstar General Hardware.
Following intelligence reports about continuous issuance and selling of fictitious invoices to different companies by Sohil Kumar and Amarshibhai Andani, both directors of Kingstar General Hardware Limited, Hoima, they were arrested.
Reports verified by URA officials indicate that these directors declared falsely generated invoices as output VAT in the period of 2018-2022.
Also some of the beneficiaries such as China Railway No.3 Engineering Group Limited and Krisha International Limited wrongly claimed Input VAT during the same period which amounted to UGX. 746,988,702 from fictitious purchases worth UGX. 4,149,937,234.
With this background, the directors were also charged in the Anti-Corruption Court last Friday,4th August, 2023.
Although the accused have since been granted cash bail of UGX10,000,000 each and a non-cash bail of UGX. 50,000,000 for each of their seven (07) sureties, they will return to court on September 4th for further hearings.
They may now face deportation.
Denis Kugonza, URA’s Commissioner Tax Investigations continues to encourage the public to desist from these vices of mis-invoicing and embrace Electronic Receipting & Invoicing Solution(EFRIS) and Digital Tax Stamps(DTS) to create a level playing ground for all legitimate business persons.
WIDER PICTURE
Recently, three directors of Wellex Hardware Limited, Kampala, 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.
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.
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.
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