It’s time the Transport sector paid its equal share of tax.

 

At a time when significant focus is drawn on the informal sector and its meager contribution to the pooling of resources to sustain the very economy it feeds onto, it is only mandatory that equity cuts across the board. The resolve the government of Uganda is taking is to have each individual pay their equal share and contribute to the development of the country. 

The Uganda Revenue Authority (URA) has keenly followed up with this mandate to explore and tap into the diverse sectors of the economy hitherto unknown and ultimately closing in on the existing loopholes. 

For instance, the informal sector is known to be mutating in nature with exact location of some businesses unknown yet government’s contribution in form of provision of basic social services are indiscriminate.  

This ending first quarter of the financial year 2014/2015, URA has laid strategies to close in on the rotating informal sector and among the sectors up for compliance checks is the unknown larger sector of transportation. 

In Uganda, the transport sector is among the most essential as other sectors heavily depend on it either directly or indirectly. Its growth is evidently substantial as it has grown by 4.5% in the financial year 2012/2013 up from 2.8% in the financial year 2011/2012! 

Government contribution towards facilitating the sector was an enormous 18.9% of the total budget allocation last financial year 2013/2014. However, the sector’s contribution to the total revenue financing the budget remained a paltry 2.2%! Its Income Tax performance has been considerably declining.

Even then, many more owners of commercial and passenger vehicles have continued to thrive in this business without complying with the exiting tax law requirements.  Section 134 of the Income Tax Act for instance requires every owner of a commercial vehicle to obtain a Tax Clearance Certificate. This proves the compliance status of a client in filing returns and paying taxes. Return filing is not just a ritual but also an obligation.

The sector has major players such as the Tour and Travel operators, Bus and Taxi owners, owners of driving schools, proprietors of landing sites, commercial vehicle owners, Courier transport service providers, operators of private crafts making internal and external flights, owners of inland water transport vessels among others. 

URA acknowledges existing challenges such as the informal nature of ownership, and is thus going to engage all stakeholders in the business of transportation educate and remind them, as taxpayers, of their rights and obligations and ensure they comply. 

Given its informality, in accordance with the law, we have come up with estimates of how much revenue comes from the particular types or classes of commercial vehicles to help in assessing those may not file returns or those who file but are found to have grossly under declared. These are in use by our staff at all URA offices. The Objection and appeals window remains open for anyone who feels this assessment is unfair, as long as they can file a return declaring realistic figures.

Our existing collaborations with the Transport Licensing Board (TLB) which issues Public Service Van (PSVs) licenses and Kampala Capital City Authority (KCCA) for information sharing are paying off already as we work together in sensitizing the different stakeholders to enable them comply. More than 2,000 owners of commercial vehicles have received communication to reminding them to comply and a number are responding.  Those who may not respond in time will get administrative assessments that may be enforced on.  Whoever has commercial vehicle, verify that it is in your names, if not get it transferred to your names as early as possible. Enforcement may catch up with you on a liability that belongs to another person who is the legal owner of that vehicle in your hands.

Transport is a key driver in the economy and we are out to ensure that the sector is formalized and correspondingly contributes to the development of the infrastructural network and other forms of development in the country.

Therefore this is to appeal to all owners of commercial vehicles, to ensure that the vehicles under their care are transferred to the current owners and to comply with income tax requirements. Please remember that other than Public Transport, other forms of transport are taxable for VAT purposes. Hence those owning “magulu kumi” and other forms of commercial vehicles that offer services in the construction sector among others with in the country, should be registered for VAT as well. I wish you a very prosperous 2015.

 

Reference:

https://www.ura.go.ug/readMore.do?contentId=999000000000290&type=TIMELINE