Uganda Revenue Authority (URA) is introducing a hi-tech electronic cargo tracking system to catch tax evaders who falsify destinations of their imports in order to cheat taxes. If successful, URA will have plugged another of those costly loopholes, in addition to pushing up its revenue collection figures.

URA officials say smugglers have changed tactics of evading taxes and are using unscrupulous agents who falsify destinations of their consignments. James Kisale, assistant commissioner in charge of enforcement at URA, says the tax body is introducing the Electronic Cargo tracking system (ECTS) to monitor movement of goods cleared as ‘transit’ at entry points into the country.

The move to introduce ECTS comes in the wake of URA recovering Shs4.15 billion in taxes evaded on goods that had been cleared last month as destined for Rwanda, Burundi and DR Congo. Kisale says that while importers had declared the goods were just transiting through Uganda, URA’s intelligence established that most of the goods did not move beyond the border.

URA recovered Shs3.46 billion in evaded taxes and fines on goods seized in Kampala last month, Kisale said on Friday.

“Smuggling seems to have taken on another level altogether because these goods had been cleared without paying any taxes,” said Kisale. “We have found out through our intelligence network that a number of these consignments are being handled by three clearing agents who have become mafias.”

“They come up with fictitious names of companies at different entry points and get the same consignments cleared without paying taxes,” Kisale said. “But we have broken up their racket and very soon they should be arrested; we’re on their heels to ensure that they face the law.”

The wanted agents have defrauded mostly Chinese importers, according to Kisale. The biggest consignment that had evaded taxes worth Shs127 million was of petroleum products smuggled for a fuel station in Kagoma.

Through Shabbel Energy, according to Kisale, two petroleum tankers were declared as headed for Rwanda but ended up in Kampala. Another consignment of 30 textile containers, cleared in Mirembengaro, was supposedly destined for Burundi but URA officials tracked it in Kampala. URA valued the taxes evaded at Shs1.8 billion on the consignment.

Other consignments seized by URA in September after evading taxes at various entry points include nine containers of neutral spirits, valued at Shs600 million; three containers of assorted hardware, worth Shs97 million and 870 cartons of assorted wines and spirits cleared as in transit worth Shs140 million in taxes.
Kisale hopes that with the ECTS, tax evasion will be largely minimized.

“This automated system will reduce human interference and corruption, which is rampant with agents and underhand dealers at every stage of the clearance process,” he charges. Already URA’s counterparts in the region- the Kenya Revenue Authority (KRA) and Tanzania Revenue Authority- are using ECTS in different areas.

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