Financial Crime World

Financial Crime Data Analysis Proves Crucial in Uncovering Tax Evasion Scheme in Uganda, Recovering Over a Billion Shillings

Uncovering a Complex Web of Deceit

The Financial Intelligence Authority (FIA) has played a crucial role in uncovering a massive tax evasion scheme by Hisem and Soxiba Limited, leading to the recovery of over a billion shillings. The investigation was facilitated by FIA’s analysis of financial data from financial institutions, revealing a complex web of deceit and misrepresentation by the company.

How it all began

According to sources, FIA’s data analysis tracked suspicious activities involving a bank account belonging to one of Hisem and Soxiba Limited’s directors, revealing large sums of money being channeled into personal accounts. Further investigation led to the discovery of a tax evasion scheme designed to conceal profits and evade taxes worth over a billion shillings.

The Investigation Unfolds

  • The Uganda Revenue Authority (URA) was subsequently alerted and launched an investigation.
  • The company was found to have been using a “missing trader” scheme to fraudulently claim input VAT credits on non-existent transactions.
  • Audited financial statements were presented, but the audit firm denied ever preparing them.

Consequences of Tax Evasion

  • URA issued several Value Added Tax (VAT) assessments, which were contested by the company.
  • After failing to pay 30% of the tax in dispute as ordered by the Tax Appeals Tribunal (TAT), the company’s application was dismissed with costs.

Additional Findings

  • The investigation also revealed that:
    • The company had been making inflated claims on invoices and failed to provide evidence of goods purchased and utilized.
    • Directors were unable to produce site managers and store managers who allegedly made purchases on behalf of the company.

A Significant Milestone in Combating Financial Crime

The successful recovery of over a billion shillings is a significant milestone in Uganda’s efforts to combat financial crime and enhance domestic resource mobilization. The FIA will continue to collaborate with URA to fight illicit financial flows, which are essential for the country’s economic recovery post-COVID-19 crisis.