Document fraud is aiding smuggling - URA’s Akol

How would you rate your performance since you took on the role of Commissioner General?
There has been significant growth in revenue collection, efficiencies in systems, human resource competences, professionalism and motivation as well as the expansion of the tax base. We have seen stakeholder engagement taking an approach where we get out of our offices and meet our clients at their workplaces, to understand their challenges and hear feedback. This helps to demystify the concept of revenue of collection.

How is URA planning to increase the tax base in terms of looping in the informal sector?
Penetration of the informal sector has been happening gradually. Going by Uganda Bureau of Statistics (Ubos) records, the informal sector contributes about 50 per cent of our Gross Domestic Product (GDP) but contributes less than 20 per cent on the tax revenue. This mismatch is an area where we get so many people appreciating and analysing policy, administration and cultural mechanisms of the informal sector not only to do business formally but also pay taxes.
We have changed the law to enable the informal sector to pay a flat rate of tax instead of having to file returns. We agreed to give them a flat rate – a presumptive rate for a whole year depending on the kind of business and location.

These are based on the turnover not thresholds –say a retail trader in Kikuubo with a retail turnover of Shs10 to Shs20 million will be paying a flat tax rate of Shs250,000 annually. Those who have a turnover of Shs50 million will be required to pay Shs550,000. . We think this will ease payment of taxes and increase the level of compliance.
So, one of the ways is to require whoever is getting a licence to trade or do business in whatever area to have a Tax Identification Number (TIN). For associations like lawyers, they have to have a TIN in order to practice.
We are also looking at how the financial services institutions get on board. One of the issues we have discussed with the financial services is to bring in services which don’t require one to carry money. People carry sacks of money to the banks to pay for land because no one wants a paper trail about these transactions.

The level of smuggling is changing with the advancement of technology and advice of tax professionals to aid tax avoidance. How is URA responding to that?
Smuggling is a challenge but it is not our biggest problem. We are looking at the shift in the way it is done. Before, people used to go through routes which are not gazetted. It is now document fraud aiding smuggling; you get a document reading something else with a lower tax value or get containers reading one item and the declaration concealed different items.

How do you intend to raise the ambitious revenue targets set by government?
Revenue targets are premised on economic growth and because we are in a growing economy, every year we project and this financial year we projected growth is 17 per cent. Given the initiatives we have put in place, we shall see more revenue collected. We also want to increase our presence in places where we do not have offices. The policy measures introduced such as increasing tax on fuel, driving permits, tax on cement and sugar will bring in more revenue.

What has been the impact of exorbitant taxes on used vehicles on revenue collection and car imports?
In 2014, we introduced a higher excise duty (environment levy) on used vehicles depending on the age. A 35 per cent levy was put on vehicles above five to eight years after date of manufacturing. Then vehicles that are above 10 years are charged 50 per cent. This levy has performed well because we continue to see surpluses in the duties arising out of this. The car importers think it has reduced importation of vehicles but we see our figures. This revenue head is doing well. Used motor vehicles are our largest imports in terms of dry cargo.
Used car importers Association have seen a decline but this has not been verified to be attributed to a levy.

What has been the impact of failure by East African Countries to harmonise tax regimes, particularly VAT, on cross-border trade in the context of Customs Union and regional integration?
We have a harmonisation drive which is on-going. We now have a Customs Union of six EAC member countries. But when it comes to collection of domestic taxes, the Customs Union doesn’t extend. Each of us is still responsible on the way we administer domestic taxes. The income tax rate in the five EAC countries is still at the same level with incorporation tax being at 30 per cent. Uganda has the high additional rate of 10 per cent. For VAT, we still have different rates- Uganda has 18 per cent, while Kenya has 16 per cent. For intra-trade, you get some disparities in the way VAT is administered; if goods are imported from Kenya at 16 per cent VAT and brought into Uganda at 16 per cent then determining the base on which VAT has been levied becomes a little complicated.

Do you have a report card on the performance of the 24-hour border operation for Uganda?
We time release studies particularly at places where we have a one-stop-border. The most current time release from customs takes an average of three to five days down from the previous 20 days.

What are the challenges of this position?
Having been in the institution for long, I did not have to learn having a wider remit on what to look at. This is something I had to adjust to. I have not had issues because all the people have been supportive and it has been ok. What has been challenging are some scuffs in certain segments especially when we had to tighten our regulation. Kacita scuffle when we took a stand that we were not going to allow smuggling –they thought our stand was tough. But we achieved consensus with them that smuggling was non-negotiable.