Ugandan taxman extends waiver to 12 firms

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By BERNARD BUSUULWA, The EastAfrican

In Summary

• An initiative of the World Customs Organisation, Authorised Economic Operator (AEO) refers to a business, an individual or government department that is engaged in international trade and has been permitted by the Commissioner for Customs to transact business through Customs channels under special arrangements that provide softer conditions for import and export operations

Twelve Ugandan firms have been awarded Authorised Economic Operator status by the taxman, bringing the number of beneficiaries to 22 in a move that offers savings in Customs related expenses.

An initiative of the World Customs Organisation, Authorised Economic Operator (AEO) refers to a business, an individual or government department that is engaged in international trade and has been permitted by the Commissioner for Customs to transact business through Customs channels under special arrangements that provide softer conditions for import and export operations.

The AEO programme is funded by Trademark East Africa, a trade promotion and facilitation organisation and was launched last year.

Those in the second group of approved firms are General Machinery Ltd, Victoria Pumps Ltd, Victoria Motors Ltd, Victoria Engineering Ltd, Victoria Equipment Ltd, Spedag Interfreight Ltd, Rapid Kate Services Uganda Ltd, Multilines International, Daks Courier Services, Union Logistics Uganda Ltd, Bemuga Forwarders Ltd and DHL International Uganda Ltd according to Uganda Revenue Authority (URA) records.

Pioneer beneficiaries of this programme are British American Tobacco Uganda, Nice House of Plastics, Uganda Batteries Ltd, Roofings Ltd plus Steel and Tube Industries Ltd.

Four firms were also awarded Bond Warehouse Managed Operator status last week — a commercial privilege that allows a company to run its warehouse facilities independently and cut expenses incurred due to delays in clearing of cargo trucks.

The firms are Nice House of Plastics, Roofings Ltd, Toyota Uganda Ltd plus Steel and Tube industries. Under the AEO programme, participating firms have experienced notable declines in turnaround times registered in transportation cycle, Customs clearance process and average import costs per unit of cargo.

Data compiled by URA shows that pioneer AEOs engaged in transport business have seen average turnaround times for truck movements fall to 2.5 days from five days in the past, reflecting potential declines in operating costs and stronger charges.

Customs clearance times for various AEOs have similarly dropped to around 1.5 days from five days registered in recent months.

While implementation of the Single Customs Territory (SCT) arrangement between Uganda, Kenya and Rwanda that commenced in February this year has sharply reduced average clearance times for selected goods such as fuel, clinker and wheat to about five days from 21 days recorded in previous years, smoother Customs procedures applied to AEOs have seemingly yielded even shorter turnaround times for this user category.

Average customs transaction costs incurred by AEOs have equally dropped by $100 to $200 per consignment, highlighting competitive advantages in final product prices charged by benefiting firms in the local market.

However, the impact of these incentives on output levels posted by AEOs in the manufacturing sector is still unclear.

“Participating companies under the AEO programme have recorded significant savings in Customs related costs. For example, Nice House of Plastics is saving roughly Ush10 million ($3,765) per month in costs incurred on clearing goods which translates into $45,175 per annum.

"These savings could alternatively be invested in paying salaries and wages in order to raise production levels. So far, $752,921 has been saved in general by AEOs,” said Richard Kamajugo, URA’s Commissioner for Customs.