Making Taxes work for you in Business

By Alfred Bamwine

It goes without saying that Ugandans complain about the country’s taxes. When you ask them what specific taxes they mean; you will hear all manner of generalized descriptions. This is not condescending.

Few people have a clear understanding of the word “Tax”. It is both a word and a sentence- in all manner of application. Let me bore you with a brief definition.

A Tax is an involuntary financial charge, payment or levy imposed on residents by the state, imposed by the force of law. Taxes have also been described as non quid pro quo payments to the state. quid pro quo is a Latin phrase meaning something for something. non quid pro quo would therefore impute something for nothing.

What this simply means is that the Taxpayer does not expect a direct proportionate return on the taxes he has paid.

It should be noted from the onset that taxes must be in accordance to the law. A tax payer should never fear to challenge the tax collector as to which or by which law the tax has been imposed. A number of levies have been challenged on the basis of lack of the law imposing the levy, but this is a discussion for another day.
So, how does one make Taxes work for him/ her? To answer this question, one needs to look at taxation as a challenge not a problem.

In life only two things are certain: Death and Taxes. For that matter Taxes are here to stay and the sooner we get used to this fact the better for our blood pressure.

Here is the challenge: Statistically, most Ugandan business persons actually do not plan for or include taxation in their expected costs and cash flow outlays. It is a fact that taxes are actually the highest single cost for any business operation. Take for example a woman who intends to import some goods for trade: The good trader makes a journey to Dubai with a budget, this budget provides for the cost of the stock she is going to buy for trade; she provides for transportation costs, she also provides for her upkeep costs. If you have travelled with small traders from say Dubai or China you will have noticed that by the time many reach the Dubai Airport on their way back, they have simply exhausted their budgets! They will have no money for even a meal if the flight delays! When, as it always happens, they exceed the weight of the luggage allowed, the solution will be to dump the excess luggage or try to impose it on fellow travelers with all the security risks this involves.

Trouble starts at the point of re-entry, usually at Entebbe airport when the taxman accost her!
The same goes for a bigger trader who operates a shop. For example this trader approaches URA and applies for the privilege to collect VAT on behalf of URA. Yes, people actually apply for this “privilege