Kampala- Uganda Revenue Authority would have collected more than Shs200b on cigarettes alone but only realised Shs74b due to a surge in smuggling of cigarettes in the last one year.
In a media briefing yesterday in Kampala, Mr Vincent Seruma, the URA assistant commissioner public and corporate affairs, said cigarette are a high value tax product that when smuggled into the country occasions a serious impact on the country’s resource envelope.
“Cigarette is high value. It enters the country through roguish ways which we are aware of. We have invested significantly in intelligence to break the rackets,” he said.
In the last six months, he said, URA had conducted several interceptions and through their intelligence recovered the consolidation centre in Kisaasi, a suburb, north east of Kampala.
According to URA, Super Match and SMS are the most smuggle brands.
Cigarette smuggling had significantly reduced over the past five years having been so rampant in the late 90s and early 2000s.
However, according to Ms Agnes Nabwire, the URA assistant commissioner enforcement, smuggling of cigarettes, especially the Super Match brand from Kenya has been on the increase in the last six months.
Two suspects, according to URA, have since been arrested and two cars, which are suspected to have smuggled in 3,628 boxes of cigarette impounded.
According to Ms Nabwire, URA has in the last six months lost more than Shs2.56b as a result of cigarette smuggling.
In a bid to grow and support the local manufacturers a high tax component on all cigarette imports was imposed. Because of this, most importers have resorted to smuggling, which is killing the local industry capacity.
“When the industries are not producing because of illicit trade the country stands the risk of losing [because there will be cheap imports] which will frustrate local industries,” Nabwire said, adding that they are doing everything possible to contain smuggling in all forms.
In the last five years URA has also been battling illicit tobacco sales that make the country lose billions of shillings in revenue.
For instance, between 2014 and 2016, URA seized more than 650 tonnes of tobacco, which partly informed the tax body’s initiative of a 10 per cent reward of the value of any seized tobacco and its products.
Apart from losing revenue, counterfeit tobacco products have a negative impact on health.
For instance, according to World Health Organisation, more than six million people die every year from tobacco-related ailments.