The 2022 Auditor General Report has exposed staggering tax evasion at the Ministry of Youth amounting to Le439,685,263.27. Out of Le507,726,923.27 deducted from payments to suppliers, only evidence of withholding tax payment of Le68,041,660 (accounting for 13% of total withholding taxes) was submitted for Audit inspection, leaving a balance of Le439,685,263.27 unpaid. This tax evasion is in contravention of Section 130 of the Income Tax of 2000.
Since 77% of the withholding tax remained unpaid, the Auditor General asserted that the issue remain unresolved. This could result in the loss of public funds. Therefore, the Auditor recommended that the Administrative and Finance Officers of the projects should ensure that payment is made immediately to the NRA and that the proof of payment is submitted for audit inspection.
The Ministry, in their response, stated that they paid the sum Nle28,611.11 to NRA as withholding tax deducted from suppliers for a service rendered, adding that the 40% of taxes deducted to contractor in respect of construction of a car wash centres would be paid when funds are transferred to the sector from the Ministry of Finance and evidence of payment submitted for verification.
They also added that as per recommendations of the 2020 audit, overpaid PAYE taxes deducted from staff salaries, amounting to Le32,782,500 were to be paid back to the affected staff.
However, owing that the NRA does not make payment refunds, a tax set-off arrangement was initiated by way of notification to the NRA, from whose outstanding tax payment owed, the overpaid taxes were deducted and paid to the affected staff. From the outstanding balance of taxes owed, Le39,430,545.00 had been paid to the NRA, the Ministry continued.
The Report also discovered how payment were made at the Ministry of Youth without relevant supporting documents. Out of Le557,251,524, payment vouchers and relevant supporting documents for 84% of the payments which totalled Le468,631,524 were submitted and verified leaving a balance of 16% of payments totalling Le88,620,000, without payment vouchers and other relevant supporting documents.
Of Le283,161,118.40, adequate supporting documents such as back to office report signed distribution list, invoices etc. were submitted for 75% of payments totalling Le211,988,715.20 leaving a balance of 25% payments amounting to Le71,172,403.20 without adequate supporting documents.
In their response, the Ministry stated that the Le30,000,000 withdrawal was a backlog payment of Imprest for the 4th quarter of 2020. The Le190,325,159 was part of the 20% refunds that was done by GIZ for a programme they fully funded. The file is available for verification. The Le29,048,986 was the withholding tax amount paid back to GIZ for a programme they funded. It is their policy to pay taxes to the NRA on behalf of their implementing partners. However, vouchers and receipts of payment to GIZ are available for verification. The supporting documents of Le23,625,000 for the repairs and maintenance of AJG347were with the previous Procurement Officer who was transferred but are available for verification. The back-to-office reports and signed distribution list of activities totalling Le268,161,118.40 made from the National Youth Farm and District Account were in a separate file and are available for verification.
Responding further, the Auditor’s said that Monitoring report including pictorial evidence of the construction of the relocated car wash centres in Metchem Hill Station, Y-Junction, Bo and Moyamba Town were submitted and verified. Monitoring report including pictorial evidence of construction of car wash centres by Mishael Kay Construction and General Supplies and Bangso Construction and Trading Enterprise were not submitted for audit inspection. Therefore, the issues are partly resolved.
