Smuggling Surge and Trade Disruptions Threaten URA's Shs36 Trillion Revenue Goal

The Uganda Revenue Authority (URA) faces mounting challenges in reaching its ambitious Shs36.74 trillion domestic revenue target for the financial year, primarily due to rampant smuggling and disrupted global trade.

At the Customs central warehouse, confiscated items like textiles, fuel, motorcycles, rice, cigarettes, and mobile phones have spilled onto verandas, highlighting the scale of illicit activities despite URA’s use of armed security, speed boats, and advanced technology.

URA already missed its first-half target by Shs1 trillion, achieving only 47 percent of expected collections, with Customs falling short by 3 percent against a daily goal of Shs60 billion.

Geopolitical tensions, especially the Gulf conflict, are curtailing imports from key sources like the UAE, causing stockouts and price hikes for electronics and sharia garments—from Shs180,000 to Shs250,000.

Tax disparities with neighbors such as South Sudan, DR Congo, Kenya, and Tanzania are major drivers of smuggling. Asadu Kigozi Kisitu, Customs commissioner, notes these gaps incentivize cross-border trade in cheaper goods like motorcycles (Shs3.5 million abroad vs. Shs5.5 million in Uganda plus high fees).

Fuel, heavily taxed textiles (with $2–$2.5 per kg duties, 18% VAT, and 15% withholding tax), and protected rice also flood in via misdeclared transit cargo rerouted back into Uganda.

Enforcement seized goods worth Shs95.3 billion last year, exceeding targets, but border officials in areas like Tororo and northern Uganda report persistent inflows from Kenya and Tanzania.

Without fixing tax policy inconsistencies and bolstering enforcement, URA’s revenue ambitions hang in the balance.

Source: Daily Monitor