Uganda has started to experience some of the negative impacts resulting from the implementation of regional economic integration.

Economic integration starts to bite Uganda revenue collection

Uganda has started to experience some of the negative impacts resulting from the implementation of regional economic integration.

According to the Uganda Revenue Authority, its implementation is resulting in the decline of import duty from the EAC partner member states.

Without quantifying the magnitude of the revenue lost as the result of the economic integration, the Uganda Revenue Authority in its performance report for the period of July to December 2019 noted that although the number of goods from the region went up, revenue collection from the partner states went down.

“There has been an increase in the number of goods from the East African Community partner states and the COMESA countries by 44.2% at a value of UGX154billion.

“Majority of these imported being semi-finished Gold,  Sorghum flour among other goods however,  the implementation of the EAC and COMESA has come along with foregone revenue in the short run hence affecting collection.

“Further, the implementation of the African  Continental  Free Trade (AcFTA)  Agreement while it opens us to wider continental market opportunities will lead to an estimated 10% reduction in import duty,” said Doris Akol the Commissioner  General of URA at a Media Briefing held at the URA headquarters in Kampala.

Akol observed that the implementation of the Economic Integration protocols has resulted into a decline in the number of goods paying import duty which has come as a result of the implementation of the policy changes which government Introduced in the financial year 2019/2020.

“Import duty is collected from only 23% of goods imported and this figure is projected to worsen with the implementation of the regional trade agreements especially the African  Continental  Free Trade Area. This, therefore, calls for us to focus on domestic sources to mobilize revenue,” indicated Akol.

Although the country has started to experience the negative impacts, Akol noted that the revenue collection from international trade during the period July to December 2019 was Ush3,537.31 billion reflecting a suppressed growth in customs tax revenue of 2.80%  which is an increase of UGX 96.33 billion compared to the period  July to December of 2018.

On the side of domestic revenue collected, Ush5, 673.57billion was collected against the target of Ush6, 109.66billion.

Akol said this was due to the poor performance in the collection of Value added Tax and other taxes.

“We have witnessed underperformance in VAT  attributed to a lower than expected outturn of Ush92.02 billion on phone talk time, Ush38.27 billion on sugar and Ush 28.62billion on beer among other factors.

“However on the good note,  URA registered positive growth in corporation tax of Ush195.35billion attributed to capital gains tax which supplemented the collection from normal flows and arrears. Withholding tax also registered a positive outturn of Ush13.40 billion,” Akol explained to the Media.

The total Revenue collection for the period was Ush9, 042.01billion and, according to URA, this posted growth in revenue of about 11.15% in comparison to the same period in the financial year 2018/2019.