Building capacity to help Africa trade better

Customs Territory promising


Customs Territory promising

Customs Territory promising
Richard Kamajugo, Commissioner Customs, URA. Photo credit: EABW

Barely a month into the implementation of the Single Customs Territory (SCT), Uganda seems to have started reaping the fruits of the first pilot project.

During a press briefing convened to announce the monthly revenue performance last week, officials from Uganda Revenue Authority (URA) announced that the volumes of fuel imported during the month of February 2014 posted a growth of 37.3% compared to the same period last year.

Richard Kamajugo, the Commissioner Customs at URA attributed the increase to the ease with which fuel dealers can now clear their products under the EAC Single Customs Territory clearance procedures.

He said despite the initial challenges experienced during the early stages of the implementation, the SCT has surpassed the projections especially in the clearance of petroleum products.

“The SCT now allows the fuel dealers to load from either Mombasa or Eldoret as long as they have met their tax obligations. This has eliminated the queues at the fuel depot in Eldoret, leading to delays in clearance times. So if one has volumes in Mombasa and the pipeline cannot move it faster, they can simply load it from there.”

He said: “The Kenya Pipeline Company has also increased its working hours and this has reduced the turnaround time from three days to just eight hours. As a result of this, for the first time we handled 135.2 million litres of fuel in one month.”

This also reflected in the petroleum duty collected in February 2014 leading to an overall performance of 98.9% in International taxes alone. In February 2014, URA managed to mobilize net revenue of Ush645b. Although this represents a growth of 11.83 % (or Ush68.25b) compared to February 2013, it was still Ush6b short of the target for the month.

This was attributed to exchange rate fluctuation which led to an estimated revenue loss of Ush14b in February 2014 as well as excise duty on imports which declined as a result of the decline in volumes of neutral spirits by 51.8% compared to February 2013 leading to a loss in revenue of Ush4.1b in February 2014

This financial year has so far proved to be a tough one given that the economy has not really shown the buoyancy that had earlier on been predicted by pundits. The continued drop in corporation tax paid as well as withholding tax proves this.

“Withholding tax on dividends, foreign transactions management fees, general supplies and government payments remained muted. The low profitability in the corporate world has translated into low dividends to shareholders. As such there was a decline in dividends by 83.35 % (Ush3.68b) compared to the same period last year,” Kamajugo explained.

He added, “Some companies have also hired less consultancy services  which has resulted in low withholding tax onmanagement services especially in the oil exploration, energy and Banking sub-sectors.”

The financial services sector as at the end of last FY was the main contributor to the revenues as banks posted impressive results.

Th going seems to be getting tougher as Kamajugo puts it, “Some of the major banks retruned nil citing some of the provisions put in place by Bank of Uganda. Some of the things happening in the economy right now have their roots dating back two to three years back.”

He adds that Corporation tax performance was affected by companies that were previously posting profits, declaring smaller profits or losses and low access to affordable credit.

This FY, URAis expected to collect Ush8.5trillion which is an increase of 19.4% over the Ush7.2trillion collected in the FY 2012/13.

So far, the tax body has been able to collect about Ush5.2trillion for the period of July 2013 to February 2014, which a 13.3% increase compared to the same period last financial year. However, this is still Ush270b short of the Ush5.5trillion they should have mobilized.

At the half way mark, the revenue body was Ush247 short of their half year target.

However, the officials are still adamant that they will be able to minimize the deficit by the end of the financial year.

They point to initiatives such as Asycuda World, the SCT and the Electronic Cargo Tracking that will be rolled out on May 2, 2014 as some of the measures that will help reduce the huge deficit.

Kamajugo says that following the successful implementation of the SCT clearance procedures on petroleum products, the process is being extended to other products such as neutral spirit, cigarettes and cement between Uganda and Kenya beginning this April. It will also be extended to trade in cement and products from Mukwano Industries between Uganda and Rwanda.


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