OPINION: The ghosts of evading URA taxes

Opinions

Someone involved in import/export business might be helpful here for us to be able to understand the intricacies of importation.

Yesterday morning URA reported it had intercepted a truck in Kayunga that was smuggling textiles and thus trying to evade paying taxes.

Well, the goods were conveyed to URA headquarters and calculations of the money due to be paid on these goods have been made as follows:

1. The total value of the goods was calculated to be $16,812 which is equivalent to Shs. 63,885,600 (x).

Total tax yield based on the value of the goods is Shs. 91,114,227 (y).

Penalty for evading taxes is Shs. 31,560,268 (z).

Total amount that must be paid to URA by the owner of the impounded goods is Shs. 122,674,495, which is the tax yield plus the penalty (y+z).

Now, even without adding the penalty and assuming that the guy went straight and declared his goods to URA for tax assessment, it still means his taxes to be paid would amount to more than the value of the goods.

With this scenario, he would be paying Shs. 91,114,227 (y).

And the total cost this importer would be incurring would be Shs. 154,999,827 (x+y).

However, now that he has to pay the tax and penalty, the total cost of his importation is going to be Shs. 186,560,095 (x+y+z).

From the above situation can anyone help me see how this guy in whichever scenario, he would be able to survive in the business unless he employs further some more and innovative underhand methods.

If it is true that the value of the goods is Shs. 63,885,600 and it is from that he hoped to make a profit, but now he has to add the legitimate URA tax of Shs. 91,114,227 which should push the value of his goods to Shs.154,999,827, what selling price must this trader put in order to be able to recoup his total cost plus a meaningful profit margin for him to stay in business.

Yet we know that most likely, since the type of fabric the guy is trading in is now known, someone armed with this insiders information will rush to import the very materials this guy has been caught with.

Because the new importer won't even have to pay any of those taxes, his consignment will reach his stores at a much lower cost than the other guy.

This new importer will have the luxury to even sell his merchandise at half the price of the other initial importer and still make humongous profits.

He will be able to have a very fast turn around and bring in more consignments while the original importer continues to struggle with unsold stock.

This is when the same URA will pounce on him for other unpaid trading taxes in addition to the rental fees of the landlord.

Isn't this the picture that most city businesses are facing which has resulted in several to simply close shop. And when this happens, URA's tax catchment size shrinks and because URA is our only sole bread winner as a country, they have to be innovative to increase to tax tight those that are still in their catchment jaws.

So the out cry of squeezing taxes has to continue. Apply double belts please!

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