Cash bonds to hit URA collections

Nov 25, 2010

THE recently-introduced cash bonds by the Kenya Revenue Authority (KRA) at the Mombasa port will affect revenue collection by the Uganda Revenue Authority (URA), the tax agency indicated yesterday.

By Stephen Ilungole

THE recently-introduced cash bonds by the Kenya Revenue Authority (KRA) at the Mombasa port will affect revenue collection by the Uganda Revenue Authority (URA), the tax agency indicated yesterday.

URA said in a statement that it was making arrangements to handle car imports at the Mutukula border post in anticipation of an upsurge of car imports via the Dar-es-Salaam route as importers shift away from Mombasa.

“This (cash bonds) will impact on the costs of importers. It means volumes of car imports will drop, and definitely tax revenue will decline,” Sarah Banage, the URA publicist, said.

Car importers are estimated to be paying up to $90m annually from the 5,000 units they import monthly.

Banage said the cash bond requirement had started with importers of neutral spirits, who were forced to shift to the longer Dar route in Tanzania.

She said in a separate statement, URA was aware of the cash bond requirement by KRA for car imports for Uganda, although they had not received a formal communication.

“We have already received complaints from Kampala City Traders Association, but URA customs team is taking it up with KRA customs because the bond requirement has also been a recurring issue on other items.

“There are concerns on which KRA premised to institute the bond requirement.

“However, since it greatly hurts Ugandan importers, the two customs administrations will find the best way to handle it,” Banage added.

“KRA’s intention in the new measure is to safeguard against dumping of vehicles onto their market by unscrupulous traders.

“It also wants to discourage the practice by traders who import cars, only to abandon them at the port for a long time.”

“URA has already highlighted to KRA the implications of the bond requirement on Ugandan imports.

“They pledged to revisit the matter although we are yet to hear from them,” Banage disclosed in Kampala on Wednesday.



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