Uganda Losing Taxes to Illegal Motorcycle Trade

Uganda is grappling with rampant smuggling of motorcycles from the Democratic Republic of Congo; the motorcycles are brought in through illegal routes on Lake Albert.

The illegal trade sees several motorcycles enter Uganda through the districts that border Lake Albert which include Hoima, Buliisa, Kagadi, and Kikuube. This trade is affecting the tax collection.

Mr. Silas Kayumba, the head of Hoima-Uganda Revenue Authority (URA) substation that covers Midwestern Uganda says over 20 motorcycles are illegally shipped and sold in Uganda on a monthly basis in Midwestern Uganda which covers seven districts.

In an interview, Mr. Kayumba says "Several motorcycles are shipped into the country illegally and over 20 illegal motorcycles are impounded on a monthly basis. If we had enough manpower, we would be impounding several motorcycles in the region."

Kayumba adds: "We charge import duty and registration fees and when a motorcycle is smuggled, the government loses between Shs500,000 and Shs800,000 depending on the value of the motorcycle."

The commonly smuggled motorcycles include the Chinese made Senke SK 125CC which are transported across the lake from Eastern Democratic Republic of Congo by a racket of dealers to several landing sites in the districts of Hoima, Kagadi, and Kikuube.

"We get reports of smuggling and we are in the field and we are impounding motorcycles. When a motorcycle is legally shipped in a country through a gazzetted entry point, it should get a registration number with Uganda Revenue Authority," Kayumba says.

On October 21, Kayumba led an operation in which several unregistered numberless motorcycles which are suspected to have been smuggled from DR Congo were impounded in Kakumiro and other areas. The illegal trade of these motorcycles, Kayumba states, poses "a security threat because they have no registration numbers and they can also be used in committing crimes without a trace." Also, he adds, "Smuggling hinders other businesses that are in genuine trade and the government loses a lot of money in the form of taxes."

Motorcycles are the most common and cheap means of transport for agriculture produce, trade merchandise and passengers because of their capacity to manoeuvre their way through on bad local feeder roads.

According to a 2016 report by Tralac (Trade Law Centre), a public benefit organisation based in the Western Cape region of South Africa, Uganda was losing ($34,640) Shs120 million per month in motorcycles smuggled into Uganda at Mpondwe border town of Kasese.

Motorcycles are among several relatively high-value items that are smuggled into Uganda to avoid duties including import duty. Others are gold, cosmetics, and cigarettes.

The annual Performance Report of 2018 jointly authored by Action Aid and Civil Society Budget Advocacy Group (CSBAG), both civil society entities that have been involved in fighting illicit financial flows, states: "... more than $3,240,000 which is Shs11.8 billion flows out of Uganda annually as smuggling is aided by some of the corrupt border officials fuelling this phenomenon", referring to Uganda's loss to Illicit Financial Flows IFFs.

Mr. Junior Katusabe, a community development officer who formerly worked at Kamina landing site on Lake Albert in Kagadi District says motorcycles are smuggled through porous entry points which have no security presence and URA enforcement authorities to provide regular checks.

He says, "Before a motorcycle is shipped in, a broker seals a deal with an intending buyer and then links up with the smugglers from DR Congo who are most of the time armed with deadly weapons. The motorcycles in smaller numbers are then shipped in at night through ungazzetted water routes and landing sites, locally known as panya."

He adds that transactions in the illicitly shipped motorcycles are hard to record or track as they are done informally by individual elements with hardly any trace. The sellers receive money via mobile money from buyers or local dealers.

In the 2011/2012 financial year, URA decided to give a 10 percent cash reward of the tax recovered on smuggled goods.

The Albertine Police spokesperson, Mr. Allan Hakiza says that marine police while working with sister security agencies like Uganda Peoples Defense Forces have been able to clamp down on illegal cross-border movements which are resulting from civil unrest in the eastern parts of the DR Congo.

"Illegal trade is being facilitated by illegal cross-border movements on the lake. However, we have been able to heighten deployment of marine protection," Hakiza says.

According to Social Science in Humanitarian Action 2018 report, Uganda-DRC cross-border dynamics says much trade occurs outside the legal framework of official border crossings, but lines between 'formal' and 'informal' trade are blurred and there is a high degree of interaction across the sectors.

This story was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation in partnership with The African Centre for Media Excellence.

Source: The Monitor

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