Denis Kugonza Kateba, the Commissioner of Tax Investigation at Uganda Revenue Authority (URA), recently discussed the implications of money laundering on tax business in an interview with Immaculate Wanyenze. Here are the key insights from the interview:
Understanding Money Laundering and its Connection to URA Business
Money laundering involves disguising illegally obtained funds to make them appear legitimate. Criminal activities such as theft, corruption, drug trade, illegal wildlife trade, cybercrime, and tax evasion generate substantial proceeds that are then laundered into the economy. In Uganda, tax evasion, a criminalized activity, contributes to money laundering. URA’s mandate is to combat tax evasion and money laundering through prevention, investigation, and prosecution.
Comparative Impact on African Countries
While there are no specific reports on the actual impact of money laundering, the African continent is estimated to lose $50 billion annually, with 65% lost through commercial transactions directly affecting revenue collection. Sub-Saharan countries mobilize less than 17% of GDP in tax revenues, falling below the 20% considered necessary by the UN for achieving Millennium Development Goals.
Money Laundering Risks in Sub-Saharan Africa
The Basel AML Index reveals that the average money laundering risks in Sub-Saharan Africa are higher than the global average. Uganda, with a risk rating of 6.83, faces significant challenges compared to countries like Ethiopia, Zimbabwe, Botswana, Ghana, and Namibia, which have lower risk ratings.
URA’s Efforts to Combat Money Laundering
URA has made progress in fighting tax evasion and money laundering through various initiatives, including:
- Implementing customs performance enhancements like Electronic Cargo Tracking, Single Customs Territory, Document Processing Centre, and one-stop border posts.
- Facilitating cross-border declaration of currency to fight illicit financial flows.
- Signing the convention on Mutual Administrative Assistance and actively participating in information exchange.
- Establishing a specialized Anti Money Laundering Investigation unit.
- Collaborating with government agencies and signing Memorandums of Understanding for information exchange.
- Encouraging whistleblowing and implementing witness protection regulations.
Dangers of Money Laundering to Tax Business
- Tax revenue leakage.
- Unfair competition leading to business collapse, revenue loss, and unemployment.
- Financial sanctions on the country, affecting international business.
- Increased compliance costs due to complex investigations.
- Distorted economic trade data and statistics affecting planning and decision-making.
Successful Prosecutions and Caution to the Public
URA is actively handling cases resulting from investigations by the Anti-Money Laundering Unit. The public is urged to refrain from tax evasion and money laundering, report offenders, and support URA in revenue collection for national development. Prosecutions under the Anti-Money Laundering Act of 2013 await those found culpable of tax evasion.
The organization emphasizes its commitment to detecting and deterring trade mis-invoicing, smuggling, phantom shipments, and dumping.
