Commercial banks operating in Uganda have moved to sue the Uganda Revenue Authority (URA) over the recent request by the tax man on all banks to disclose account details of all individual customers which they say is unconstitutional.
The 30 commercial banks under their umbrella body Uganda Bankers Association have filed a case in the Constitutional Court challenging the recent request by URA which they contend, violates the right to privacy as guaranteed by the Constitution of Uganda.
They argue that the request contravenes Article 27 (2) which states that “No person shall be subjected to interference with the privacy of that person’s home, correspondence, communication or other property” as well as Article 2 which describes the Constitution as the supreme law of Uganda “and shall have binding force on all authorities and persons throughout Uganda”.
In its March 16 letter, URA asked banks to furnish all the information the banks hold on their customers including Account name, Tax Identification Number (TIN), National Identification Number (NIN), address, telephone number and email address.
Banks were also asked to provide the total cash deposits into the individual accounts for the period January 2016 to December 2017 as well as the total cash withdrawals from that account in the same period.
But in their litigation filed on April 9 against the Attorney General and Commissioner General, the banks quote Article 2 which stipulates that if any other law or any custom is inconsistent with any of the provisions of this Constitution, the Constitution shall prevail, and that other law or custom shall, to the extent of the inconsistency, be void.
Section 41 of the Tax Collection Procedure Act which gives URA powers to impar the right to privacy is beyond what is acceptable and demonstrably justifiable in a free and democratic society, and is accordingly null and void .
They also say that ordering all financial institutions to provide account details of customers for the last two years is “an indiscriminate fishing exercise” that “lacks an objective rational basis and impairs the right to privacy of all basic account holders in Uganda” .
In making the request, URA quoted Section 42 of the Tax Procedure Code (TCP) Act which states that in an attempt to obtain information or evidence, “the Commissioner may, for the purpose of administering any provision of a tax law, require any person, by notice in writing, whether or not liable for tax to furnish, within the time specified in the notice, any information that may be stated in the notice”.
However, bankers contend that contrary to the express provisions of Section 42 (1) of the TCP Act, it does not indicate any provision of any tax law that is intended to be administered with the benefit of the information sought from the Petitioners.
They further argue that the clause fronted by URA relates to investigations but under the current circumstances, there is no pending tax investigation in relation to each and every bank account holder in Uganda.
