Uganda rejects plan to collect revenue at sea coast

By Charles Kazooba

Uganda has rejected a regional plan to start collecting revenue at the coast; especially at the ports of Mombasa and Dar es Salaam.

In an attempt to fast-track a single customs authority, it had been suggested by the heads of state of the five partner states in April last year that revenue be collected at points of entry into the region to create transparency in the management of the revenue by EAC member states.

But Uganda has expressed unwillingness to surrender her sovereign powers over import taxes to the East African Community customs authorities, which is likely to be a major setback to the integration process.

In a research published mid April and commissioned by TradeMark East Africa, the business community and government bureaucrats said the Uganda Revenue Authority should continue assessing and collecting revenue on goods imported into the country in total disregard of the Heads of State’s position.

“Traders are concerned that once they pay at the port of entry, the Uganda government will lose interest in guaranteeing safety of their goods from the ports to the point of destiny,” said Dr Paul Bagabo, a co-author of the research findings.

A destination model was adopted for revenue management by heads of state in April 2012. The model entails collection of customs revenue and other levies on goods imported from outside the region at the first point of entry and remitted to the destination country.

This means that Uganda and other East African member states would have to relinquish their powers to collect taxes to EAC customs authorities at Mombasa and Dar es Salaam ports.

The research recommended that the importer of the goods in the country of final destination prepare a declaration on the value and quantity of goods to the port of first entry electronically through an integrated customs management system from any location.

Should Uganda’s position be upheld by the EAC Summit, it is unlikely that a single customs territory will be attained very soon.

Currently, ports (points of entry) handle over 80 per cent of the imports for Uganda and are thus critical for economic development and growth in the country. Cargo volumes increased by about 12 per cent in the first six months of 2012.

Uganda’s imports from both EAC partner states and other trading partners grew by more than two fold from 2005 to 2011. Subsequently, duty revenue steadily increased from about Ush935.6billion ($362,584,294.4) in 2005 to about Ush3.6 trillion ($1.4bn) in 2011.

Because partner states operate different currencies for payment of customs duties, differences in payment of duties (Ugandans paid according to cash flow—installments), collection of duties through commercial banks, the researchers recommended that Uganda continues to assess and collect revenue on goods imported into the country.

Under this arrangement, importers make payment for common external tariff based on the valuation of goods to a designated commercial bank in the country of final destination.

Thereafter, provisions should be put in place to enable goods to be released into the region at the first point of entry.