11 May 2017

East Africa: Juba Conflict Hits Uganda's Economy

Photo: Daily Monitor
South Sudanese rebels (file photo).

Elegu — Uganda's economy is being pushed to the wall following the renewed conflict in South Sudan that is currently sending waves across the region Uganda is one of South Sudan's biggest trading partners. The county's revenue body, Uganda Revenue Authority (URA), targets Shs200 million monthly in taxes at the South Sudan-Uganda border at Elegu.

Without quoting the figure of the generated revenue URA said they are now struggling to meet the target.

With the renewed conflict in the world's youngest nation, the volume of the cross-border trade has significantly reduced, affecting neighbouring economies.

Importers and exporters pay required dues, including taxes, to URA through clearing agents who take charge of processing the consignments either at the first coastal port of entry or at the Uganda border.

At Elegu, URA does clearance of both import and export. And 98 per cent of what the revenue authority clears is goods transiting through Uganda from Mombasa via Kenya and into Uganda to South Sudan.

The remaining two per cent is mainly foodstuffs that come from Uganda such as bananas, beans and cabbages, among others.

The goods that come from Mombasa are basically foodstuffs such as maize and sorghum being delivered to South Sudan under UN World Food Programme.

Tax evasion

Insecurity has brought with it tax evasion. While all eyes are focused on Juba and Jonglei, the conflict in South Sudan and tax evasion have been sending economic ripples to Kampala.

Exact figures do not exist, but Uganda currently loses millions of Shillings in revenue, according to Mr Alfred Ocen, URA officer in-charge customs enforcement.

"We used to clear on average 70 to 100 trucks in a day but the volume has reduced by more than three quarters since the war broke out," Mr Ocen told Daily Monitor last week, adding that revenue collection is affected because many traders are unwilling to pay taxes.

All the exported goods that come from abroad and Uganda as long as they are transiting through Uganda, do not pay taxes. They only pay taxes to destination country, he explained.

Custom duties are paid to the country of consumption, except for certain goods that a particular country may tax because it wants to restrict their exportation to other countries.

Like in Uganda, hides and skins and fish are taxed because they are useful to the country. URA explains that levying taxes on exported hides and skins and fish acts as a protection measure so that the items are not completely depleted.

"The major challenge is that some people tend to evade taxes by passing through areas that are not gazetted," URA's regional spokesperson, Mr Godson Mwesigye, said.

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