Drivers and implications of import tax evasion in Uganda
This policy brief compiles administrative data from the Uganda Revenue Authority (URA) to identify potential import tax evasion in Uganda and considers factors that incentivise firms to evade.
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Eissa et al. Policy Brief August 2024.pdf
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- Combating the evasion of import taxes would help boost revenue collection in Uganda. Utilising administrative data from the Uganda Revenue Authority (URA), we identified potential evasive misreporting and estimated the associated fiscal cost.
- We focus on two strategies that firms may follow to minimise their import tax liability: (i) under-reporting the value of their imports in customs declarations and (ii) overclaiming the VAT they paid on imports when filing VAT returns. Our estimates indicate that import tax evasion amounts to around 6.7% of Uganda’s total public revenue annually.
- Higher tariffs and a weaker Ugandan shilling (UGX) make imports costlier, which may increase the incentives for importers to evade.
- Access to Indian export data is necessary to identify the precise channels for tax evasion and suggest relevant interventions.