News and Views
URA officials named in sh10b tax fraud
By Felix Osike
Uganda Revenue Authority officials have been implicated in a sh10 billion tax fraud.
The Auditor General, John Muwanga, in a recent audit report said the officials entrusted with collection of taxes , were instead conniving with unscrupulous business people evade payment of taxes.
The audit cited irregularities at several customs check points, fraud in registration of vehicles and illegal operation of customs bonded warehouses.
In one case at Busitema check point in Eastern Uganda, ten trucks were impounded over customs declaration based on false documents and relating to goods imported from Kenya. The trucks impounded between September 17 and 23, 2011 were however released without recovery of the taxes relating to the dumped goods.
“A review of the URA investigation report established that total of 102 consignments with a tax value of sh5.4b had been dumped without paying taxes. It was noted that out of the outstanding taxes on the dumped consignments, only a total of sh.360,766,391 was recovered leaving a balance of Shs.5,047,416,917 un-collected,” the report noted.
This loss was result of the clearing agents, importers and URA staff dumping containers of shoes, electricals, hand bags and other high value goods using forged Kenya Revenue Authority (KRA) declarations.
“The transit documents were validated by URA staff and the trucks allowed proceeding to the respective sales stores without reporting to the Inland Container Depot/bond as per procedure,” the AG observed.
The goods were mis-declared as raw materials such as whiting, calcium carbonate, polystyrene, putty and would be cleared in Kampala Customs Business Center (CBC), without being verified and were always erroneously selected green (OK).
Two Internal Container Depots /Bonds (W0078 – Multiple and W0246 Maina Speedy) were reportedly used in this scam, according to the investigations.
Statements from intercepted truck drivers for KAV045T/ZC4309 and KBH166S/ZD1224 revealed that all the containers they conveyed would have the shippers’ seals broken by URA staff, the goods sighted and the containers re-sealed again with URA seals, which confirmed the involvement of URA staff in this racket.
The investigations covered a period of only six months from April 2011. But the fraud is suspected to have started in September, 2010. A possibility of more losses occurring in the period prior to the investigation could not be ruled out.
When contacted URA spokesman Paul Kyeyune said he was not aware of the case. “I cannot comment. I am not privy to that information,” he told the New Vision
Fraud was also detected in the clearance of other consignments worth sh5.2b. The entries C46080 and C46083 for Malaba dated July 14, 2010 were for fresh pastured milk, entry C22 for Oraba, Southern Sudan dated July 16, 2010 had aero-plane parts and C95725 for Kampala dated December 14, 2010 had assorted spoons and forks.
They were entered on documents for temporary imports to be re-exported or entered for home consumption after paying taxes.
URA explained that M/s Brookside Diary Ltd imported raw milk for purposes of processing and that the processed and packaged milk was re-exported. However, there was no export entry as proof of re-export by Brookside Dairy Ltd.
At Mbarara customs station, URA officials registered a Mercedes Benz number UAJ 909B in the names of Kiberu Collins Richard. The system again registered another motor vehicle Toyota Corsa in the names of Hakiiza Ronnie with the same number (UAJ 909B) but this time differentiating it by adding a dot at the end. The Corsa was released without paying the due taxes and assigned log book number LB146603.
This fraudulent registration that occurred in April 2007 was only discovered in 2010. “With this control weakness, many more such fraudulent motor vehicle registrations may have occurred un-detected leading to revenue losses,” the AG noted.
Entries from Mutukula custom’s station showed eight (8) foreign registered vehicle entries were still outstanding at the time of inspection July 26, 2011 implying that the vehicles were still in the country yet they had not renewed their stay.
Most of them are Tanzanian registered cars. They include a Subaru registration number T878BCE, Toyota Carina (T516ABQ), Toyota Land Cruiser (T573AHE), Toyota Landrover (T937BHS), Toyota Harrier (3765AB19), Toyota Prado (CD1EAC7), Toyota Fun Cargo (T634 AUR) and Toyota Liteace (NK8469BB). Such vehicles must exit or renew their stay by payment of road user charges and licence fees. URA explained that they were investigating these cases.
Forged URA Receipts
The auditors discovered instances were URA receipts were forged by URA clients and taxes lost. A URA communication, reference URA/ACF/10.5, of April 8, 2011, asked the Orient Bank Entebbe Branch to credit a total of Sh175, 283,319 in customs revenue collection with their URA account in the same bank.
But later Orient bank in a letter of June 24, 2011, denied the transactions claiming that the stamp used on the receipts and Bank Payment Advice Forms was forged. The suspects arrested by Police in the matter were later released on bond, according to records seen by auditors.
The audit also revealed that some bonded ware houses did not renew their licenses in 2011, yet they were known to be operational. E