The Country Representative of Gabriel Registrar, who also doubles as spokesperson Kampala City Trades Association (KACITA) Issa Sekitto has asked Uganda Revenue Authority (URA) to address the issue of customs valuation which he said has remained a challenge for all regimes up to today.
Sekitto said the matter needs to be urgently treated, adding that it is not only a source of controversy and bribery but a source of so many mischiefs on the side of customs.
Sekitto made the remarks while appearing on the NBS SpotlightUG Show on Monday night.
He noted that there is also a fresh challenge of the implementation of the East African customs harmonised policies.
“You will agree that as East African member states, please can we now collect taxes, based on 35% import duty, for example for things coming outside, the East African community. The unilateral application of this, at times challenges the business community. Remember the issue of textiles, the issue of mobile telephones, the issue of watches, the issue of hardware of recent,” he said.
“I don't know whether some member states in the East African Community are playing as a trick of evaluation. It all goes back to the method of evaluation. I have also had challenges recently whenever Parliament passes a law to the revenue authority,” he said.
Sekitto also asked URA to start profiling taxpayers even before the tax body demands money from them, adding that in some circumstances some businesses are given reminders yet they collapsed years ago.
“It is very unfortunate that your business died three years ago and you are receiving reminders. Could we be opening new business while others are being killed .It is very good to profile sectoral data. While we want compliance, while we want the taxes, we have to keep businesses afloat,” he said.
In response, John Musinguzi, the Commissioner General, Uganda Revenue Authority (URA) said no business should collapse out of paying taxes, noting that is the reason they opened up as URA to talk to the taxpayers.
“(If a business collapses), there has to be a mistake somewhere. You have relied on a fake tax agent and there are so many in this town and they have misrepresented you, not filed, not paid and they laid you and when we discover it is too late. So we have opened up as URA to listen to our taxpayers,” he said.
He appealed to the taxpayers to always approach them, citing ledger reconciliation which he said is very helpful to the taxpayers.
“Tax is a sacrifice, it won't be easy. That's why I want to salute all Ugandans and economic players who make a sacrifice and honour their tax obligations. Tax that is paid collectively doesn't hurt a business,” he said.
Responding to the emerging issues in the arena of customs, Abel Kagumire, the Commissioner Customs at URA said the primary method used in the valuation of goods imported is the use of the transaction value.
“Transaction value is how (the price) you bought your goods. URA will rely on your invoice value to determine the value. URA adds transportation costs and Insurance.Let us take for instance goods say at USD 20,000 and transported them by water to Mombasa from China; the transport cost (freight of say USD 3000) is added. To this, we add the Insurance of say USD 1000. This gives us a (Cost+Insurance+Freight) value of USD 24000," he explained.
To get to the total taxes payable by an importer under method 1, he said they get the total value (CIF) and apply the applicable tax rates (% of Import Duty, VAT, Excise Duty, Withholding tax depending on one’s compliance levels and infrastructure levy.
Transaction value method 1 is the primary method of valuation. To move to any other method, this method must be fully satisfied.
In the event that one of the transaction documents are unavailable or problematic, alternative methods are used for instance identical goods.
"The 6% payable by importers is a compliance enhancing tax. It is a benefit that comes the way of a compliant taxpayer. Depending on how compliant you are, the Commissioner may determine that because of your high compliance levels, you should not pay it,” said Kagumire.
He said that Uganda is under the single customs territory.
“When goods are made in Kenya, they are simply transferred to Uganda. It is goods that come from beyond that EAC that are imports. When the policy on garments and textiles was implemented on those items that are billed per kilogram, we saw an increase in the smuggling of those items. That policy is something that we are attempting to review with policy makers.”