The decision by Uganda Revenue Authority (URA) to review taxes filed by big ticket importers has some traders fearing more penalties that could go back five years.

This post-customs clearance audits are not strange, and the URA occasionally launches such reviews if it suspects the taxes actually paid by importers do not tally with the goods imported, on their books.

URA officials say the audits involve verification of previous import declarations to establish accuracy of cargo volumes, valuation figures, and taxes paid.

Discrepancies discovered in customs declarations and invoices usually attract additional tax bills. Except these audits cover periods of up to five years of import activities according to tax experts.

While URA was economical on specifics, citing policy, sources among importers told The EastAfrican that audits carried out on certain manufacturers in recent months have found culpabilities on the part of importers, even though the goods in question were brought in years ago, and spent.

The URA changed the valuation criteria applied to imported mattress covers, for example, and this has found many of the mattress makers in Uganda exposed because it triggered new tax obligations. The firms, through their local lobbies then sought an amicable settlement but the URA hasn’t resolved the issue yet.

“Some clients might choose to settle with URA in order to avoid getting bogged down by cumbersome tax audits. But others might prefer going to court in order to protect their businesses from extreme tax bills,” explained Nicholas Kabonge, a tax manager at PWC Uganda.

In Uganda, most of those affected by these audits are multinationals and manufacturers who import raw materials. At least 10 manufacturers are facing those audits at the moment.

When URA first audited some manufacturers, it found huge discrepancies that the new tax demand would amount to new imports. After initial tax, the URA halted the demand but could go after firms in the wake of pressure to meet tax targets.

But as URA faces pressure to collect more, it could make it routine for audits going forward, as the taxman faces pressure to meet targets, Jet Tusabe, the Tax Director at BDO Uganda, an audit firm.

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