URA projects spur tax compliance but challenges remain

Only a few months in her job as Uganda Revenue Authority Commissioner General, Doris Akol is desperate to win the hearts and minds of taxpayers. On Jan. 20, she left her capacious office to lead a team of her officials to a visit of traders i n Kampala’s busiest trading hub, Kikuubo, in Kampala. Of course she expected to hear complaints – taxpayers often have many complaints. She listened as the taxpayers went through a litany of the challenges they face.

Some of the traders indeed expressed their dissatisfaction with URA’s e-tax system powered by Automated System for Customs Data (ASYCUDA World). Akol admitted that the ASYCUDA network had issues but added that they were expanding capacity of their servers to manage the challenges.

Earlier, Akol and URA hosted six Ambassadors of the Netherlands to the various countries in the East African Region plus DR. Congo. They wanted to observe and get a report on the performance of key projects or reforms which their country through Trade Mark East Africa had supported. The projects in question include; ASYCUDA World worth $5.834mn, Authorized Economic Operator (AEO) worth $0.2mn and Electronic Cargo Tracking System (ECTS) worth $2 mn.

Speaking on behalf of his colleagues, Alphons Hennekens, the Ambassador to Uganda, expressed satisfaction with the progress the revenue body had made in fostering regional integration. “We will continue to partner with you so that the East African Community becomes a reality,” he said.

Richard Kamajugo, the commissioner for Customs at URA, said the ASYCUDA World project, which was rolled out progressively between April, 2013 to December 2014, has seen 98% of total customs transactions and customs revenue collected. As a result, revenue collection has improved so far by 21%; from $427 mn in October, 2013 to $778 mn in December, 2014, Kamajugo said. The system has also improved clearance time to an average of 1.1 days compared to over five days before. Improved transparency of customs operations through status notifications during declaration processing, reduced queuing and movements to different customs offices are also some of the benefits. The system has also facilitated the interface with other revenue authorities in the region – Kenya Revenue Authority, Rwanda Revenue Authority, and Tanzania Revenue Authority with the result that the implementation of the Single Customs Territory (SCT) has been achieved thus reducing the number of multiple declarations to just two – at the point of entry in the EAC and at final destination.

On Electronic Cargo Tracking System, the URA bosses told the ambassadors that the tracking system had led to the complete elimination of physical escorts, improved the security of goods in transit, improved staff performance and reduced transit time from eight days to two – resulting in cost savings of US$400-600 per truck per day.

For instance, between May 9 and Aug. 6, 2014, some 4,214 consignments used ECTS, resulting in savings of almost $548,000 in escort fees. Also, 22 Ugandan companies had been accredited under the Authorized Economic Operator (AEO) project where all customs declarations related to an AEO are given priority clearance, thereby saving time and costs.

Hans Paulsen, the managing director of Vivo Energy, said the reforms have made business easier. “There were challenges in the past when it came to clearing,” he said.

Paulsen, whose company imports 100% of its fuel, said, 68% of the trucks crossing the Busia border are petroleum trucks and this is expected to rise because of these reforms.

As a result of implementing these reforms, URA said it had seen an increase in revenue collections by 16% from 2013 to 2014 and an increase of 18% in fuel volumes for period February to July 2014.

Hennekens was positive that reforms at URA would boost trade within the region and have a resultant impact on poverty levels. “Improved regional trade will accelerate the transformation of Ugandan agriculture which is a core element of Uganda’s Vision 2040,” he said, adding that regional integration contributes to poverty reduction and is an incentive for attracting Dutch investors to the country.

Frank Matsaert, the CEO of TradeMark Africa, said they are seeing increased trade activity between Uganda and other countries in the EAC as customs reforms are the catalyst that was needed to bring about prosperity to the region.

Come March, businesses transacting at the Busia border between Uganda and Kenya will find it easy to clear their goods entering and leaving the two countries once the construction of Busia One Stop Border Post (OSBP) is completed. Under this arrangement, the two customs will be housed in one single office to handle customs matters. Currently, businesses transacting at this border spend over four hours clearing with the two customs because the latter are housed in different locations, just metres away from one another.

Alex Rubanga, the supervisor for customs in charge of Busia Border, said once the project is completed, they expect clearance to be done in one location and that will cut the time by half. Rubanga said the two customs clear 250 trucks a day – some 7, 500 trucks a month. Kamajugo and Akol assured the visiting Ambassadors that URA is committed to implementing efficient systems and offer value for money, which will go a long way towards making paying taxes simpler for the taxpayers hence improving compliance.

Source: The Independent

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.