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Car imports are set to be more expensive after Uganda Revenue Authority moved to scrap an evaluation system that favoured importers with a strong bargaining power.

In the meantime, URA has drawn up a price list for imported cars that all importers should abide with, a radical move that goes against the tenets of a free market economy. URA has been depending on valuations from importers.

The car evaluation system that URA is planning to abolish is called ‘Method One.’ Under this system, URA has been assessing taxes charged on used motor vehicles based on information provided by importers, which include emails between buyer and seller, and invoices.

URA’s plans have thrown the once calm car importation industry into disarray. Dealers who had already ordered and paid for cars before URA swung in action are facing a difficult situation. Importers warn that the price of a car is set to shoot up.

“We’re disappointed with URA which has decreed that henceforth with one of the most internationally accepted taxation methods which serves to be fair to both URA and the business community should cease to be applied,” said Steve Manyire of Equation Business Solutions, a consultancy and advisory firm dealing in online car shopping.

Manyire argues that URA is simply being heavy-handed and unrealistic.
“If there’s a snake in the house you don’t set the house ablaze. You look for the snake and kill it. URA should just arrest those who have abused the system and penalize them,” he charged.

Paul Kyeyune, URA spokesman, said the method had been abused, forcing the tax body to do away with it. Starting this June, taxes on imported vehicles will be determined on URA’s fixed prices as quoted by manufacturers.

“We have carried out an extensive investigation and found out that most of them have been forging email exchanges and invoices,” Kyeyune told The Observer last week.

However, Kyeyune declined to give details of URA’s investigation, or the magnitude of the loss the body has incurred due to falsification of the documents.

URA’s new price list is based on information gathered from importers, websites, reference books, just to mention a few. Some of the taxes that importers pay to URA include import duty (25 %), VAT, environmental levy, withholding tax (6%), registration, just to mention a few.

That’s not all that the car importers are complaining about. Many say that URA’s fixed dollar rate also makes it costly to pay their taxes. URA’s dollar rate for May has been fixed at Shs 2085, lower than the market rate of Shs 2140.

Nevertheless, importers say that since they are purchasing goods in bulk, URA’s dollar rate should be “significantly lower” than the market rate.

Now, the new price list from URA changes the entire business model of importing cars. Simply put, this means that if an importer brought in a BMW model 2004, URA will value that car according to its internationally quoted price.

URA will not consider the fact that perhaps the seller decided to dispose of the car at a lower price due to constraints he or she is facing.

Lately, many Ugandans have taken on buying used motor vehicles sold online, with a bulk of them being imported from Dubai, Japan, UK and South Africa.

The only statistics available show that used motor importers paid up to Shs 2.65 trillion in taxes to URA between 2003 and 2006.

But that contribution to the national coffers is expected to be declining. For instance, between January and June 2009, URA cleared only 3,500 used motor vehicles, less than half the annual total of 15,787 imported into the country in 2008.

URA is facing a tight race against a time to beat its annual revenue target before the next financial year starts next month.

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Comments

 
+1 #1 Kamya Musoke 2010-05-13 16:11
I do not really understand how the URA will employ the internationl pricing list of the used car!

The pricing on this list may be taking into consideration of only the Age of the car and the mailage, but rather not other conditions like, discolouring, state car interior and underneeth, scraths and dents, mechanical condition of the car etc.

The foucs of URA & Government should not only be collecting money from the people but also to formulate a taxation system that stimulates investiment and business growth.

We are all facing tough economic times, not only URA is failing to reach its income targets! On the claim of abuse of declarations and forging of e-mail communications between the seller and the buyer, not everyone is involved in this kind of act.

The companies selling vehicles on line are well known and with the IT department of URA this problem can be easily solved, by involving URA in the negotiation process of the price.

The URA could be directly copied to the communications by both the buyer and the selling company while negotiations are ongoing. Also copies of money transfer papers could be sent to URA directly by the sending and/or receiving side.

Alternatively, the selling company may send the sells papers directly to the URA. So, these papers can be compared with the buyers declarations and if there are any alterations, then the declaring person should be made to pay a penality.

Hopefully URA managers will take some time to rethink about the proposed approach. For God and my country.
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+1 #2 Motz 2010-05-14 08:42
This is Crap, Is this is due to one man who has refused to leave power and the expense of poor citizens.

The gap between the halves and the have nots is increasing very quickly beyond imaginable levels. We are totally tired of this regime and it's poor policies.

This is a simple issue that can be controled by URA if at all the claim is only forgery. Use technology to solve your problems rather than thinking backwards and sinking the whole nation with your poor managent style.
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0 #3 70667 2010-05-14 13:02
Tax ideally is meant to improve public properties. So in a country like UG where things are sliding from bad to worse, it is a BIG BIG shame that Kagina and her crew can hold up their heads and ask the already hard-pressed and hard-working citizens to pay more!

Besides this proposed taxation methods exposes their deficiency to come up with innovative and standard ways to evaluate property. Shame you on URA!
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0 #4 Aragon 2010-05-14 13:31
URA needs to style up. they are money hungry and the ones that suffer are the importers. Cars are going to rot in the Bonded warehouse all because someone wants to make a quick buck.

There's an electronic trail which can be followed to ascetain the true value of the car without have to resort to Bulldozer tactics.
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0 #5 Manyilirah William 2010-05-15 13:33
I'm in total support of Musoke Kamya's (see comment above)suggestio ns. With a proactive IT department at URA, problems of car-import forgeries should never ever have influenced URA to come up with such unfavourable tax arrangements!

I thought our leaders have for a long time been telling us how a "Free Market" our economy is. If this approach by URA is implemented, then the pricing of other commodities such as fuel should also be directly influenced by the responsible government agencies.

If I may ask,what is the role of the Ugandan parliament in this? We're submissive and just docile in this country!
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0 #6 m. Yakisanyi 2010-05-15 15:06
I think ura is heading in the right direction, what they intend to do is what is being done in the civiliased economies.

for eng if two people buy 2005 X5BMW why should do not they pay the same tax? after roll if one them, bought it cheaper, he has already saved on the purchase price.This a straight forward method, which eliminates ambiguety and forgery.
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0 #7 SIMON S TEBYASA 2010-05-16 01:44
URA knows that most cars that are imported into uganda are second hand and with the argument that they are to use the quotations provided by manufacturer is just a joke.

with the corruption in most government organisations especially the URA, this system too will be abused from within the URA. its obvious that the quotaions from the manufacturers are for new cars,but there are website like kelly blue book, http://www.kbb.com where the pricing/valuation of cars is done basing on the millege, and quality of the car.

URA should use such mechanisms otherwise its bound to fail.
URA should fix the problem by spending a bit of the money they collect to make contact with the origin/seller of the imported cars as this can be an easy way to verify the so called communications between the importers and the origins of the cars if URA is in any dought
URA should check its self before it checks the impoters for forgery
SIMON S TEBYASA
MISSOURI
USA
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0 #8 kyagulanyi william 2010-05-16 11:25
its sad that revenue wants to increase its tax base by cheating country men.

if an importer presents papers to it before assesing why dont they first send am email to where the importer claims to have imported the vehicle so that they they get the truth of the matter. we should not forget that this is an internet error
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0 #9 kyagulanyi william 2010-05-16 11:28
i therefore request management to also visit websites where we purchase vehicles from and have a knowelege of the prices
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