By Spy Uganda
The Uganda Revenue Authority (URA) has raised alarm over an escalating scheme in which unscrupulous taxpayers are fraudulently claiming customs exemptions by forging subcontract agreements and falsely representing government-funded projects as donor-financed initiatives.
According to the URA’s Tax Investigations Department, multiple cases have emerged in recent months where individuals and companies attempt to exploit tax exemption provisions meant to facilitate genuine development efforts. These exemptions typically apply to donor-funded projects, allowing duty-free importation of goods such as machinery, construction materials, and vehicles.
However, investigations have revealed that some taxpayers are fabricating or altering subcontract agreements to fraudulently claim that they are executing donor-funded projects, when in fact the projects are entirely financed by the Government of Uganda. In most instances, the claimants are not even officially subcontracted to carry out the stated work.
“The level of misrepresentation we are witnessing is alarming,” a URA official stated. “These schemes are clearly designed to cheat the system and deny the country vital revenue.”
Among the documented tactics is the submission of fake subcontractor letters and manipulated project documents to URA in applications for customs exemptions. In several ongoing investigations, projects falsely claimed as donor-funded have been verified to be part of fully government-financed programs, such as national road and bridge infrastructure initiatives.
URA has warned that such fraudulent practices constitute criminal offenses under Section 203 of the East African Community Customs Management Act, 2004. Individuals found guilty of submitting false declarations or forged documentation face prosecution, cancellation of exemptions, financial penalties, and confiscation of the imported goods.
The Authority has already instituted enforcement actions, including seizures of goods, revocation of improperly granted exemptions, and the initiation of criminal proceedings against those involved. Several importers are currently under administrative review as part of the ongoing investigations.
To prevent future abuse, URA is calling for greater transparency and compliance from taxpayers—especially contractors engaged in government and donor-funded projects. The Post Clearance Audit (PCA) and Tax Education teams are spearheading efforts to remind stakeholders that exemptions are not entitlements but privileges granted to facilitate authentic development efforts.
“URA will not allow a few dishonest players to abuse the exemption system at the expense of national revenue and public trust,” a PCA officer emphasized.
The Customs Department is also enhancing its vetting mechanisms and has committed to working closely with government ministries and development partners to verify every exemption claim.
As part of its wider compliance strategy, URA is encouraging members of the public to report any suspected cases of customs or tax fraud. Whistleblower reports can be submitted anonymously through URA’s official platforms, with assurances of strict confidentiality.
URA reaffirmed its commitment to supporting honest taxpayers while continuing to crack down on those who seek to manipulate the system for personal gain.
