A critical flaw in the electronic-portal system used by the Uganda Revenue Authority (URA) is resulting in the loss of nearly Shs10 billion in non-tax income for the government. The system, a stand-alone standards administration scheme responsible for clearing imports and collecting tax revenues, has been found to be backdated, allowing numerous imports to remain uninspected for quality.
A recent government audit, conducted by Auditor General John Muwanga, brought to light the significant financial implications of this portal malfunction. Muwanga explained that a bug in the system falsely indicates that inspections were carried out before shipments were routed to the Uganda National Bureau of Standards (UNBS). Consequently, these uninspected imports bypass the required pre-verification of conformity (PVOC) processes, undermining the quality control measures in place.
The portal, operated by URA and the ASYCUDA World systems, facilitates a connection with the UNBS systems for quality control. The bug in the system creates a deceptive impression that inspections were completed, hindering the necessary PVOC procedures.
Enacted by the UNBS Act of 1983, the PVOC is an inspection and verification program aimed at ensuring the quality and safety of imported goods entering Uganda. This program, conducted through appointed inspection agents, safeguards consumers from substandard products. Compliance with technical regulations and standards is outlined in Article 5 of the World Organisation (WTO) Agreement on Technical Barriers to Trade (TBT).
The government’s evaluation during the 2022/23 fiscal year revealed that 336 cases had evaded examination, resulting in an estimated loss of $2.63 million, equivalent to Shs9.7 billion, in non-tax revenues. The inaccessibility of these items under the PVOC procedures prevented the state from collecting non-tax revenues, such as the 15 percent surcharge on the cost, freight value, and insurance.
In response to the audit findings, Mr. Muwanga stated in the report, “Management [of UNBS] explained that three staff have been interdicted while investigations are ongoing (both internal and by the Police criminal investigations department). I advised UNBS Management to expedite the investigations and take appropriate action.”
Helmsman Quality & Technology Services Limited, a Chinese enterprise, is among the providers of PVOC services in Uganda. However, it faced scrutiny in August of the previous year when the Parliamentary Committee on Tourism, Trade, and Industry investigated its operations. The committee recommended termination due to concerns about the company lacking offices in the supervised locations—Dubai and India. Furthermore, it was revealed that the firm, one of the six hired by UNBS, does not have any offices in Uganda. This led the committee to call for investigations by the Director of Public Prosecution (DPP), citing potential fraudulent processes.
The World Trade Organisation has contracted UNBS and other companies, including Bureau Veritas Uganda, TUV Rheinland Middle East, Quality Inspections and Services Inc. Japan, and Societe Generale Desurveilance, to inspect and verify goods in compliance with its requirements.
