Whistleblowers might start earning less commission if a proposal by government is approved by parliament.

According to new suggestions contained in the Tax Procedures Code (TPC) (amendment) Bill 2019, the government seeks to reduce the payment to informers to 5% from the 10% it has been paying. The Tax Procedures Code Bill regulates the procedures for the administration of specified tax laws in Uganda, to harmonize and consolidate the tax procedures under existing tax laws.

Every year, the government amends the TPC to provide measures that enhance tax mobilization or boost investment. According to audit firm PricewaterhouseCoopers (PWC), the government says the money they are paying out to informers is a lot of money and they could make a saving by cutting this to 5%.

It is not clear how much money the government has been paying out annually vis-a-vis the recovered monies because Uganda Revenue Authority does not publish such information.

This provision of 10% payment to informers was provided for in section 8 of the Finance Act, 2014 which states: “The [URA] Commissioner-General shall pay to a person who provides information leading to the recovery of a tax or duty, the equivalent of ten percent (10%) of the principal tax or duty recovered.”

There are already questions among experts over why the government is pushing such a policy reversal. Paul Lakuma, a research fellow at Economic Policy Research Centre (EPRC), said he was not aware of the policy reversal but added that any analysis of the policy shift must consider its impact on whistleblower on one side and the revenue on the other. 

“Was the policy very generous? Is the recovery sufficient to justify the generosity? Does the instability in policy cause loss of confidence among the whistleblowers?” Lakuma.  

Government has provided little details to answer the above questions but URA has often times battled in court after a disagreement on the payments. One recent case is that of an informer Lorna Kamau, who in 2017 dragged the tax body to court demanding it pays her Shs 836 million, as a reward for purportedly divulging Shs 8.3bn in withholding tax from telecom company Airtel Uganda Limited. Whistleblowing involves risk to life and jobs loss. The 10% was being paid to informers as a thank you for risking their lives and jobs to get key leads to the tax body.

There is likelihood that a cut to payment to informers could dissuade some individuals from divulging some key tax information. URA didn’t respond to our inquiries on the issue. Ministry of Finance and Economic Development also did not respond to our call for comment. Tax bodies world over use tax informers to recover money from tax cheats.

Article published by The Observer on April 16, 2019

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