January 19, 2021

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OPINION: Hidden Costs in Motor Vehicle Advance Tax

2 min read

By Bazira Henry Mugisha

Uganda Revenue Authority (URA) is in the process of transiting from interpersonal payment of taxes to electronic tax payments.

While this is a welcome development that will minimize and gradually eliminate interpersonal interactions, the electronic tax payment system is still riddled with administrative inconsistencies.

For example, the Motor Vehicle Advance Tax is associated with hidden costs. When a taxpayer uses the URA e-services portal to make an assessment for the transfer of a motor vehicle, the system gives an automatic assessment for income tax of commercial vehicles (known as Motor vehicle Advanced tax).

This, however, upon payment based on the e-service assessment is often rejected by URA officers that usually demand an additional Advance tax payment. This disorganizes taxpayers and breeds doubt in URA administration.

A conversation with one of the clearing agents that was assisting a taxpayer transfer a commercial vehicle was required to pay an additional Shs 125,000 on top of Shs 175,000 that was assessed by the e-services system bringing the total motor vehicle advance tax paid to Shs 300,000.

URA e-services motor advance tax assessment requiring the taxpayer to pay Shs 175,000.

Evidence in this regard is the pictures above showing the URA e-services motor advance tax assessment requiring the taxpayer to pay Shs 175,000, while those below are receipts of the amount the taxpayer actually paid based on the e-services system and an assessment by the URA Officer at Nakawa that included an additional Shs 125,000 payment bringing the total tax to Shs 300,000.

Receipt of the amount the taxpayer paid based on the e-services system.

There is no clear justification as to why the taxpayer was required to pay an additional 125,000 when the e-services system had already made an assessment.

Receipt of the amount paid to an assessment by the URA Officer at Nakawa that included an additional Shs 125,000.

Discrepancies in online and direct tax assessments need to be resolved, lest they portray URA as being corrupt.

 

The author, Mr. Bazira Henry Mugisha is an Executive Director of Water Governance Institute and a member of the Tax Justice Alliance – a civil society coalition that deals on tax and tax mobilization issues.

 

The post OPINION: Hidden Costs in Motor Vehicle Advance Tax first appeared on ChimpReports.