Counterfeits are hurting Uganda’s tax collection

Since time immemorial, public tax collection has always been a thankless job. The irony however is that public taxation is a public good which we all contribute to and benefit from individually and communally.

Whereas any taxation system will have challenges with fairness and equity or adequacy and transparency, it is counterintuitive not to recognise the tremendous strides we have made in this area.

The Anti-counterfeit Network joins the rest of the country in congratulating the Uganda Revenue Authority for hitting the milestone of 30 years in existence.

It is commendable that despite the havoc caused by Covid-19 pandemic on the economy, the URA was able to register the highest year on year revenue growth index for the FY 2020/21.

This was among all five East African Countries. That achievement is significant considering that the URA has only 23 active border points on our vast land borders which spread out on some 2,700kms.

As the Anti-counterfeit Network, we are cause driven to promote the the buying and selling of genuine products in a country where counterfeiting is part of the new normal.

Apart from encouraging Brands to do more in supporting legal enforcement measures as well as helping consumers to differentiate between the genuine and the fake products, ACN prides itself in rallying regulatory stakeholders in a united front against counterfeits.

To this end, ACN has had several engagements with URA which include the training of customs officers in handling counterfeit imports under the WCO sponsored workshop in August 2017, the CEO structured dialogue on counterfeits held in 2018 and the structured dialogue on the Digital Tracking Solution in 2020.

At ACN, we recognize that the 5 intervention pillars of legislation, enforcement, regulation, technology and awareness when applied together, can effectively push back the menace of counterfeits.

Our experience shows that enforcement and seizures alone without more will not achieve much if consumers continue to provide a market for counterfeit products and services.

To this end, ACN recognizes efforts made by URA to provide a stop gate to prevent the entry of counterfeits on the Ugandan market, be it by import or local production. ACN also recognizes various track and trace technological solutions deployed to ensure tax compliance to prevent counterfeiting activities.

ACN needs to underscore the need for more stringent verification of the origin or source of manufacture of the goods to check the rampant intellectual property infringement which is the main driver of counterfeit business.

URA has the mandate to bar entry of counterfeit and substandard goods since they are categorized as prohibited and restricted goods under the East African Community Customs Management Act 2009.

It is worth noting that in the FY 2020/21, out of the tax revenue of 19.2 trillion collected in that year, 71% was generated from the wholesale and retail trade sector and yet the same sector accounts for most of the counterfeiting activity in business.

In our considered view, there must be a delicate balance between the need for public revenue and public safety without one destroying the other.

As part of the public policy of Uganda, we should not legalise counterfeit business by knowingly taxing it because counterfeiting is a crime.

Like the proceeds of any other crime, counterfeit goods should be seized, destroyed and the culprits prosecuted.

There is no doubt that any short term gains we may make in taxing counterfeit businesses will be wiped out by the immense damage caused to legitimate business which will stagnate or curtail our economic development.

Counterfeit activity is known to discourage much needed local and foreign investment which will invariably lead to job cuts and lower tax revenues for Government.

The closure of African retail Giants like Shoprite is caused in part by the unfair and parasite practices of counterfeiters which will leave a huge dent in our tax collections.

As the URA pursues its new vision of a transformational Revenue service for Uganda’s economic independence, the tax collector must be supported to build a legitimate tax base to foster economic development and independence. ACN will continue its collaboration with URA to promote a counterfeit- free Uganda.

The author is the chairman, Anti-Counterfeit Network Africa (ACN)