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The Uganda Revenue Authority (URA) has launched a crackdown on corrupt practices within the importation sector, targeting the so-called ‘container leaders’ who have been exploiting small and medium importers.
In a statement shared by John Museveni Rujoki, the Commissioner General of URA, the authority revealed that several key facilitators of this corruption were arrested last week, as part of the effort to combat tax evasion and ensure transparency in the country’s importation process.
Container leaders are individuals, who take on the role of importing goods on behalf of smaller importers who often have no capacity to fill up their own container.
The leaders charge shipping fees from each of the shipments in the container, as well as for taxes to be paid to URA.
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Rujoki explained that ‘container leaders,’ who often act as intermediaries for smaller traders unable to fill entire containers with goods, had been creating a fraudulent middle layer between importers and URA.
These unregistered individuals, some of whom were not known to the authorities, were charging importers inflated taxes far beyond what was due, exploiting the system for personal gain.
"This has been a cartel exploiting importers, but now we are breaking them," Rujoki stated, noting that the recent arrests were just the beginning of URA’s efforts to root out corruption.
Exploitation of Small Traders and Loss of Government Revenue
The scheme, according to Rujoki, had seen small traders being charged up to five times the actual tax due on their goods.
For example, a shipment that should have attracted a Shs 10 million tax was being charged Shs 50 million by the container leaders.
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“This has been a cartel exploiting importers. Now we are breaking them. As a matter of fact, last week we arrested some of the key facilitators of this corruption because it has been pure exploitation of the importers, but also stealing of taxes,” he said
"We therefore want to encourage every importer to deal directly with URA. The moment goods arrive in the country, each taxpayer should engage directly with URA to verify their goods and pay the correct taxes," he added.
Rujoki went on to clarify that, while it was acceptable for others to transport goods, the responsibility for verifying and paying taxes lies with the importer.
He further warned that, due to these corrupt practices, many traders were paying more VAT on goods.
"Remember that for every good you import, you pay VAT on them. That is what we call VAT input. When you put these goods in your shop and sell them, you collect VAT on them. That is VAT output,” he explained.
"The net VAT that you pay to URA is the VAT output minus the VAT input. Now imagine where you have no VAT input. That means you will pay higher VAT because you have nothing to reduce the output that you have collected."
Rujoki further clarified that the new operation is not a ban on consolidated importation as some had feared when the news first emerged last week.