Traders protest new URA tax
KAMPALA City Traders Association (KACITA) has demanded that the Uganda Revenue Authority (URA) rescinds its directive abolishing an internationally recognised customs valuation method.
By David Mugabe
KAMPALA City Traders Association (KACITA) has demanded that the Uganda Revenue Authority (URA) rescinds its directive abolishing an internationally recognised customs valuation method.
The traders say abolition of Method One (M1) where taxes are assessed based on transaction value, violates the World Trade Organisation/General Agreement on Trade and Tariffs (GATT) as well as the East African Community Customs Management Act.
Peter Malinga, the URA commissioner for customs in an April 19 circular, directed that alternative assessment methods are used with immediate effect following “numerous practical challenges with respect to customs valuation of used motor vehicles.â€
In the past, duty on vehicle imports were assessed basing on the price quoted from the country of importation.
As an international practice, the taxes were computed based on documentation provided by the importer and exporter.
But car importers say the URA customs value guide is outdated, unrealistically high and ignores the realities on the international used car market.
They say the tax body is simply attempting to make up for shortfalls in its coffers.
In March, URA had a shortfall of sh41b.
“We, therefore, demand that you withdraw the memorandum with immediate effect to save the revenue authority multiple court cases as well as protests from the industry players all of which are pending,†said KACITA chairman, Everest Kayondo, in their April 21 response.
“We further put you on notice that we are forwarding our complaints to the East African Community and WTO to impose it upon you to respect the legal framework that Uganda is a state party to,†added the two-page letter. However, URA denied banning the first method.
“What we are saying is don’t look at the face value and just accept, try other methods as well,†said Richard Kamajugo, the assistant commissioner of trade.
Malinga said URA now considers applying all the six assessment methods that the law provides for because there are increasing cases of people using technology to defraud the system.
“What people have done is they have created their own websites. “We used to accept values for used items/vehicles if you show evidence that you purchased through a website.
“But because of fraud, those who are doing genuine business are left uncompetitive and are forced to learn the unscrupulous methods of doing business,†he said.
Mathew Abita, the URA customs valuation officer, said out of every five cases, three are fraudulent.
While the authority denies the ban, the customs officers at Nakawa stopped using the method after the directive.
The clearing agents who lodged their assessments based on the method, had numerous queries.
An internal communication also betrays Malinga’s arguments that the ban was not on.
An April 20 memo from Sarah Kasheka, the URA manager for Kampala region, instructed that customs values should apply on all used vehicles not yet processed with immediate effect.
But KACITA said while they appreciate the practical challenges faced by URA, the memorandum was in utter contempt of the law; GATT and schedule 4 of the East African Community Customs Management Act.
KAMPALA City Traders Association (KACITA) has demanded that the Uganda Revenue Authority (URA) rescinds its directive abolishing an internationally recognised customs valuation method.
The traders say abolition of Method One (M1) where taxes are assessed based on transaction value, violates the World Trade Organisation/General Agreement on Trade and Tariffs (GATT) as well as the East African Community Customs Management Act.
Peter Malinga, the URA commissioner for customs in an April 19 circular, directed that alternative assessment methods are used with immediate effect following “numerous practical challenges with respect to customs valuation of used motor vehicles.â€
In the past, duty on vehicle imports were assessed basing on the price quoted from the country of importation.
As an international practice, the taxes were computed based on documentation provided by the importer and exporter.
But car importers say the URA customs value guide is outdated, unrealistically high and ignores the realities on the international used car market.
They say the tax body is simply attempting to make up for shortfalls in its coffers.
In March, URA had a shortfall of sh41b.
“We, therefore, demand that you withdraw the memorandum with immediate effect to save the revenue authority multiple court cases as well as protests from the industry players all of which are pending,†said KACITA chairman, Everest Kayondo, in their April 21 response.
“We further put you on notice that we are forwarding our complaints to the East African Community and WTO to impose it upon you to respect the legal framework that Uganda is a state party to,†added the two-page letter. However, URA denied banning the first method.
“What we are saying is don’t look at the face value and just accept, try other methods as well,†said Richard Kamajugo, the assistant commissioner of trade.
Malinga said URA now considers applying all the six assessment methods that the law provides for because there are increasing cases of people using technology to defraud the system.
“What people have done is they have created their own websites. “We used to accept values for used items/vehicles if you show evidence that you purchased through a website.
“But because of fraud, those who are doing genuine business are left uncompetitive and are forced to learn the unscrupulous methods of doing business,†he said.
Mathew Abita, the URA customs valuation officer, said out of every five cases, three are fraudulent.
While the authority denies the ban, the customs officers at Nakawa stopped using the method after the directive.
The clearing agents who lodged their assessments based on the method, had numerous queries.
An internal communication also betrays Malinga’s arguments that the ban was not on.
An April 20 memo from Sarah Kasheka, the URA manager for Kampala region, instructed that customs values should apply on all used vehicles not yet processed with immediate effect.
But KACITA said while they appreciate the practical challenges faced by URA, the memorandum was in utter contempt of the law; GATT and schedule 4 of the East African Community Customs Management Act.