B. FAQs - CUSTOMS 15

B. FAQs - CUSTOMS 15

Uganda like any other country in the world has Laws and regulations which control the movement of goods in and out of the country. Qn1 : Qn 2: Qn 3: Qn 4: Who is a clearing Agent? This is a person or firm in Uganda authorized by Uganda Revenue Authority (URA) to act on behalf of the Importer. It is his duty to compile all Customs documents and put them through Customs processes for clearing purposes. Once the Customs Duties and VAT in respect of imported goods have been paid, whatever the case may be, the goods will be released by Customs to the Importer. Who is a Forwarding Agent? This is a person who acts on behalf of the exporter in the foreign country. He facilitates the movement of goods from foreign country to Uganda. What are clearing instructions? The Clearing Agent must receive specific clearing instructions from the Importer before he can exercise his mandate. Elaborate on payment of Customs Duties? It is the responsibility of the Importer to make sure that he/she pays the prescribed Customs Duties and taxes where they are required to do so. Failure to do so is an offence and is punishable by law as duty is a debt to the State. Where duty remains unpaid, this can result in detention or forfeiture of the imported goods to the State. 16 Qn 5: What are Prohibited Goods? The importation of the following goods into the Republic of Uganda is strictly prohibited:- Used tyres for light commercial vehicles and passenger cars. Pornographic materials in all kinds of media, indecent or obscene printed paintings, books, cards lithographics or other engravings, and any other indecent or obscene articles.

All soaps and cosmetic products containing mercury. Any other goods listed in the prohibited goods listed on page 156 of the East African Community Customs Management Act (EACCMA). Qn 6: What are Restricted Goods? Certain goods may only be imported provided you are in possession of the necessary authority / permit. If in doubt whether importation of goods is restricted, please contact the URA on the toll free helpline 0800117000. A few examples of the goods in question are listed below for your information:- Endangered species of plants or Wildlife, whether dead or alive including any parts of and articles made from the Arms and ammunition Bows, and Arrows Genetically modified products Any other goods listed in the restricted goods listed on page 157-158 of the EACMA. Qn 7: Qn 8: What are some of the basic Customs documents for imports (Customs clearing by your Agent) These include the following:- Transport Document e.g. Bill of Lading / Airway Bill. Bill of Entry Direct Original Commercial Invoice (not a pro-forma Invoice) Packing List (if necessary) Permit (Authority) if required, depending on the nature of goods imported (restricted goods). Why doesn t the Customs Law allow self clearance for all importers? This is intended to streamline the process. Self clearance status is granted after assessing the compliance level, the capacity and the nature of business of the applicant. 17

CUSTOMS CLEARANCE PROCEDURE- WAREHOUSING OF GOODS Qn 9: What is a bonded warehouse? A bonded warehouse is any warehouse or other place licensed by the Commissioner of Customs for the deposit of dutiable goods on which import duty has not been paid and which has been entered to be warehoused. Qn 10:Are all goods allowed in the bonded warehouse? The following goods shall not be warehoused: (a) acids for trade and business; (b) ammunition for trade and business; (c) Arms for trade and business; (d) Chalk; (e) Explosives; (f) Fireworks; (g) Dried fish; (h) Perishable goods (i) Combustible or inflammable goods except petroleum products which are stored in approved places. (j) Matches other than safety matches (k) Any other goods, which the Commissioner may consider to be unsuitable for warehousing. Qn 11:Can any premises or building operate as a customs bonded warehouse? An application for the licensing of any premises as a bonded warehouse shall be made in Form C22. The application shall be accompanied by a plan of the premises and its situation in relation to other premises. The Commissioner of Customs may issue a license upon payment of a license fee and where he or she is satisfied that the situation, construction of and accommodation in the premises proposed are suitable for use as a bonded warehouse. 18 Qn 12: How much is the license fee for a bonded warehouse? The license fee for a bonded warehouse is one thousand five hundred dollars (USD 1500) per annum. The licensee of a bonded warehouse is also required to execute a bond in Customs Form CB. 6.

Qn 13: Is a person licensed to operate a bonded warehouse allowed to make alteration to a bonded warehouse as he likes? A person shall not make any alteration to a bonded warehouse without obtaining the permission of the Commissioner of Customs. A person who contravenes this regulation commits an offence and shall be liable to a fine not exceeding one thousand dollars. Qn 14: What if the person who has been licensed to operate a bonded warehouse dies? The death of a licensee of a bonded warehouse or any other change in circumstance which renders a licensee to honor a bond should be reported immediately to the Commissioner for Customs by the surety. Qn 15: Is it necessary to label and number a bonded warehouse? Yes. The words Customs Bonded Warehouse and number allocated to a customs bonded warehouse shall be clearly marked on the principal entrance to the customs bonded warehouse or in any other place the proper officer may approve and shall be removed when the customs bonded warehouse ceases to be licensed as such. Qn 16: Is it a requirement for duty free shops also to be labeled? In the case of a Duty free shop the word Duty Free Shop and the number allocated to a duty free shop shall be clearly marked on the principal entrance to the duty free shop or in any other place the proper officer may approve and shall be removed when the duty free shop ceases to be licensed as such. A person who contravenes the provisions of this regulation commits an offence and is liable to a fine of five hundred dollars. Qn 17: What happens to the goods when the bonded warehouse is due for closure? In the event that a notice is given by a proper officer to the owner of any goods warehoused in a bonded warehouse that it is proposed to close the warehouse, the owner shall, within the period specified in the notice, enter the goods for home consumption, exportation, or for removal to another bonded warehouse. 19

Qn 18: What happens to person who removes goods from a bonded warehouse without following Customs procedures? A person who takes or causes or permits to be taken, any goods from any warehouse without following customs procedure commits an offence and shall be liable on conviction for a term not exceeding two years or a fine equal to twenty-five percent of the dutiable value of the goods. Qn 19: For how long can an importer keep his goods in a bonded warehouse? The Goods that have not been removed from a warehouse within three months from the date they were warehoused may with the written permission of the Commissioner of Customs be re-warehoused for a further period of three months. The commissioner may in addition to the period of re-warehousing permitted by law allow for further period of re-warehousing as he or she may deem appropriate for the following cases:- (a) (b) (c) Wines and spirits in bulk warehoused by licensed manufacturers of wines or spirits; or Goods in a duty free shop; or New motor vehicles warehoused by approved motor assemblers and dealers. If such goods are not re- warehoused as above, they shall be sold by public auction after one month s notice of such sale has been given by the proper officer by publication in such manner as the Commissioner may deem fit. If such goods are of a perishable nature they may be sold by the proper officer without notice, either by public auction or private treaty, at any time after expiry of the initial warehousing period. 20 Qn 20: I have imported a vehicle and have about half the amount of tax to be paid but am afraid of the bonded ware house fees. What advise can you offer me? This vehicle cannot be ex-ware housed unless all customs duties have been paid. It is advisable to first have the customs duties paid then a release order is issued, bonded ware house fees will be paid and vehicle will be released.

Valuation Qn 21: What is Customs Valuation? This is customs procedure applied to determine the customs value of imported goods, if the rate of duty is ad-valorem. The customs value is essential to determine the duty to be paid on the imported goods. It constitutes the taxable basis for customs duties. It is also an essential element for trade statistics, for monitoring quantitative restrictions and tariff. Qn 22: What are specific and Ad- valorem duties? Customs duties can be levied in either specific or Ad- valorem terms, or as a mix of the two:- In case of specific duty, a concrete sum is charged for a quantitative description of goods. e.g. one US Dollar per item or unit. In this situation, the customs value of the goods does not need to be determined, as the duty is not based on the value of the goods. In such a case, no rules of customs valuation are needed and the customs valuation agreement does not apply. In contrast, ad-valorem duties of customs are duties levied according to the value of goods and are usually expressed as a percentage of the value. e.g. 5% in order to arrive at the amount of the duty payable on an imported item. Here, the rules are based on the customs valuation agreement. There can also be composite duties that are partly ad-varolem and specific. Qn23: What are the benefits of implementing the customs valuation agreement? The agreement is intended to provide a single system that is fair, uniform and neutral for the valuation of imported goods for customs purposes, conforming to the commercial realities and outlawing the use of arbitrary or fictitious customs values. The agreement by its positive definition of value, recognizes that customs valuation should be, as far as possible, based on the actual price of the goods to be valued. Qn 24: Why do Values of goods vary even if traders buy them from the same source? According to the General Agreement on Tariffs and Trade (GATT) valuation, the price that is actually paid or is payable is the one that is considered and it is indicated on the invoice. Discounts are allowable but 21

subject to verification. Value variations also occur due to various reasons e.g. price, time, quality, level of transaction, individual costing, Place of destination, freight and Insurance e.t.c. Qn 25: Why are gifts sent from abroad taxed by URA? Gifts sent from abroad are unaccompanied and are in this regard not catered for under the exemption regime since it focuses on passenger baggage. Qn 26: If a trader goes to United States of America and buys a camera at UGX 10,000,000/=, does he pay tax on the camera at the point of entry? The law stipulates that you should pay, however, If a person spends 24hrs outside the country, items whose value does not exceed United States Dollars (USD 300ollars) qualify as personal effects and do not attract tax. In this case, the camera definitely costs above $300 dollars so it is liable to taxation. However, if the trader uses the camera to take photographs in the United States of America, he shall be entitled to the camera as a personal effect if it is presented as passenger baggage. Enforcement Qn 27: Where are goods impounded or seized by URA taken? Sec. 214 of the EACCMA 2004 renders goods once seized to be deposited in a Customs Warehouse or a place so deemed. Normally such goods are advertised in the print media for a period of one month before they are auctioned. Payments Qn 28 (i) What import duty rates are applicable to an importation of a second hand motor vehicle which is more than 8 years old? The rates of duty payable are indicated in the table next page. 22

Passenger Car Pick Up truck Truck 3.5 tonnes carrying capacity Import Duty 25% 25% 10% 0% Environmental Levy 20% - - - VAT 18% 18% Exempt Exempt Withholding Tax 6% 6% 6% 6% Truck Gross Vehicle Weight - 20 tonnes N.B Environmental levy is applicable when the motor vehicle (other than a goods vehicle) is 8 years old or more. (ii) What would be the estimated tax payable if a person imported a Toyota Corolla, G-Touring, two wheeldrive, manufactured in 1999 at United States Dollars 3,500 CIF Mombasa? CIF is an abbreviation for : C = Cost of the motor vehicle I = Insurance charges paid to insure the vehicle up to Mombasa F = Freight charges paid to transport the vehicle from country/port of shipment to Mombasa Convert the CIF value into Uganda shillings equivalent using the prevailing URA monthly exchange rate. Let us assume the vehicle was imported in September 2009: URA exchange rate for September 2009 was: 1 USD = 2,092.63 Duties applicable are: Import duty at 25% of CIF VAT at 18% (CIF + Import Duty) Withholding tax at 6% of CIF (would not apply in case the importer is exempted from withholding tax) Environmental Levy at 20% of CIF (applicable to motor vehicles that are eight years or older other than goods vehicles) 23

COMPUTATION OF TAX PAYABLE Uganda Shillings CIF (using exchange rate for Sept 2009) 3500 x 2,092.63 7,324,205 Customs Duty & Taxes: Import duty (ID) CIF x ID rate 7,324,205 x 25% 1,831,051 VAT (CIF + ID) x VAT rate (7,324,205 + 1,831,051) x 18% 1,647,946 Withholding tax (WHT) CIF x WHT rate 7,324,205 x 6% 439,452 Environmental Levy CIF x Levy rate 7,324,205 x 20% 1,464,841 Licence fees: Registration fees Note that registration fees for personalised number plates for motor vehicles is Shs 6,000,000 1,000,000 Form fees 18,000 Bank charges where applicable 2,000 Number plate fees - payable to the manufacturer 73,000 Tax payable 6,401,290 Total amount payable 6,476,290 QN 29: What is the standard process of clearing my goods out of a customs bonded warehouse after taxes have been fully paid to URA? Refer to the table next page containing the Customs Business Centre Standards 24

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Qn 30: Under what circumstances does an importer have to pay a top up (additional taxes) when clearing their goods? When the value is reappraised or reassessed upwards When there was misclassification e.g If the importer declared 10% import duty under a certain HS Code but it was found that the goods fall under a different HS Code with a higher rate of duty. When a wrong origin is declared in order to benefit from preferential treatment e.g COMESA,EAC. Qn 31: What are the standard obligations of importers? To obtain a Tax Identification Number (TIN), which is issued free to every applicant and is the unique identifier for all tax purposes. a) File correct Tax Returns for Income Tax and Value Added Tax, Customs Entries for Import Taxes or any forms relating to taxes and other revenue related obligations at the right time and place, as the laws require. Pay the correct tax at the right time and place as required by relevant laws. Deal and cooperate only with the Authority s authorized staff that must be properly identified. Make full disclosure of information and correct declaration of all transactions at all times. Resist any temptations to indulge in tax evasion and other illegal practices. URA at Post Parcel Office 26 Qn 32: What is the Role of URA at the Post Parcel Office and what is the procedure if parcels attract taxes? Uganda Revenue Authority is mandated by the East African Customs Management Act to verify the contents of each parcel received at the Post Office in the presence of the recipient. The contents are

assessed by URA and the recipient is advised on how much tax to pay for the items. PROCEDURE IF GOODS ATTRACT TAXES 1. 2. 3. 4. 5. 6. Qn33: The client arrives at the post office and produces the call notice to post office staff for them to call the parcel. The parcel is retrieved and presented to customs by post office staff. The parcel is then opened and the contents verified by the proper officer for customs in the presence of the owner of the parcel If the value of the goods in the parcel is above US$50 then the proper officer at the Post Parcel office, captures a simplified single administrative document for the cargo in the parcel, and issues an assessment of the taxes to the recipient. Taxes to URA are paid in the Bank. The most commonly used bank is Crane Bank, opposite Constitutional Square in Kampala. After payment, a receipt will be issued by the concerned bank to the client, who will present it to URA for release of parcel(s). Esteemed clients are given 21 days within which to pay the taxes. If one fails to pay within the stipulated time, the parcel(s) may be transferred to the Customs Warehouse in Nakawa where they may be auctioned to recover taxes. What are the taxable parcels / items at the Post Parcel Office? The East African Community Customs Union (EACCU) Common External Tariff (CET) book contains the tax rates per item in the nomenclature. After an item is classified by customs, the tax rates for import duty can be viewed in this tariff book. 27

Ninety nine percent (99%) of the parcels received at post office are gifts, donations and personal effects. The fact that they are gifts does not exempt them from taxation. Gifts and donations are TAXABLE in Uganda. Exemptions are listed in the fifth schedule of the East African Community Customs Management Act. Qn34: Qn35: Is it true that courier companies like DHL do not pay taxes for their parcels? It s a misconception that courier companies like DHL import goods that are not taxed. The truth is that these courier companies issue invoices to their clients inclusive of transport handling and URA taxes which are paid by the courier companies in advance at Customs entry points e.g. Entebbe Airport. What taxes are payable for parcels received through Post Parcel Office? Different goods attract different tax rates. This implies that one needs to know the exact description of the goods imported in order to determine the taxes applicable, if at all, and hence compute that taxes. In general terms, taxes payable on goods include:- Import Duty (varies with each item) VAT Withholding Tax Environmental levy Excise duty Qn36: What is the procedure for upcountry parcels when received at the Kampala post parcel office? Upcountry parcels are verified in Kampala post office by URA staff in the presence of Posta (U) Ltd staff. Where the value of the goods in the parcels is above US$50, then customs officers at post office Kampala will manually assess the taxes payable, and then attach this assessment to the package going up country. The parcel(s) is/are dispatched with Call notes, indicating taxes payable This money is paid to Posta (U) Ltd office upcountry, in any town where the parcel is received. Posta (U) Ltd then remits the money to URA 28