When Mrs. Akello completed her CTA course, she opened a tax consultancy firm specialising in international trade. She has hired you as a tax consultant and assigned you to advise M/S Kaggwa (U) Ltd on tax matters. After your first meeting with the client, you have established that M/S Kaggwa (U) Ltd is a major importer of aluminum products in Uganda. The managing director (MD) of M/S Kaggwa (U) Ltd has learnt that there is a government body entrusted with the enforcement of laws and regulations relating to collection of duties and taxes on imports and exports. The MD has also learnt that taxes are calculated on a specific and advalorem basis and that the customs value of the items needs to be determined before taxes can be paid. He has also learnt that there are a number of documents required to determine the customs value that include but are not limited to the sellers invoice, evidence of transport and insurance expenses, purchase orders, proof of payment documents, packing lists, bills of lading and sales contracts. M/S Kaggwa (U) Ltd has imported a consignment of 20 metric tons of galvanized water pipes from M/S Sandstone Ltd, one of the biggest aluminum manufacturers in India. The consignment was invoiced at USD 22,000, ex- factory, plus freight and insurance of USD 3,500. The freight and insurance are composed as follows: USD 200 for road transport carrier delivering the goods to the seaport of loading on the seagoing vessel in transit to Mombasa, USD 1,800 for ocean freight and insurance to Mombasa. The bankers, Silver Trust Bank charged them USD 600 for the letters of credit. After clearance in Mombasa, the company paid the transporter USD 700 to deliver the goods. The company paid insurance of USD 200 to secure the goods from Mombasa to Kampala to the shipper. Awaiting loading on the seagoing vessel, the goods were temporarily stored at Mumbai seaport for two days by the transit carrier for which M/S Kaggwa (U) Limited was charged USD 180. M/S Kaggwa (U) Limited also separately paid USD 75.0 for loading, unloading, handling and documentation charges at Mumbai, India.

Required: Write memo to M/S Kaggwa (U) Ltd advising them on the following: (a) The meaning of customs valuation. (2 marks) (b) The purpose of customs valuation control in the valuation process. (8 Marks) (c) The relevance of international documentation in the business of customs clearance. (10 marks) (d) The customs value elements. (10 marks) (e) Determination of customs value of the galvanised water pipes imported by M/S Kaggwa (U) Limited. (5 marks) (f) Computation for the total amount of tax payable on the 20 metric tons of galvanised water pipes imported by M/S Kaggwa (U) Limited; using the exchange rate of 1USD = Shs 2,540.40, Import duty (ID) rate of 25%, VAT rate of 18% and With- holding Tax (WHT) rate of 6%. (10 marks) (g) The various laws governing customs administration in Uganda.

SECTION B Question 2 The WTO Trade Facilitation Agreement (TFA), which was agreed by WTO members at the Ministerial Conference in Bali in December 2013, is the first multilateral trade agreement concluded since the establishment of the WTO in 1995. Article 1 of the TFA provides for the publication of procedures for the importation, exportation and transit for the benefit of the various stakeholders. Customs procedures involve a series of customs activities, tasks, steps, decisions and processes that when undertaken in the sequence laid down, produce the required results which may include meeting revenue targets, facilitating trade and collection accurate statistics. A surveying firm that has just been contracted to offer its services to aid the construction of a bridge in Kampala has approached you for tax advice on the procedures to be followed when the aircraft containing their survey equipment lands at Entebbe airport. These items include theodolites, graphometers, measuring equipment, tripods, retroreflector machinery, navigation equipment and the like.

Required: Advise your client on the: (a) meaning of trade facilitation. (b) benefits and challenges of implementing the trade facilitation agreement. (10 marks) (c) arrival and reporting procedures of aircrafts into the customs territory. Question 3

Prohibited goods are goods listed under section 18 (1) of EACCMA, in schedule 2 that are any goods the importation, exportation or carriage coastwise of which is prohibited under this Act or any law for the time being in force in the partner states. Mr. Smith is a tourist who is visiting Uganda for the first time. Customs searched his luggage at importation and discovered that he had a number of items that included used clothing, shoes, pornographic magazines, mercury containing cosmetics, used tyres for passenger cars, used television set, a camera, a tortoise shell, notebook, cocaine, portable mattress and firearms.

Required: Advise Mr. Smith on: (a) The rationale for prohibitions within the context of the Customs Management Act. (Total 25 Marks) (b) Prohibited goods for importation under the Customs Laws. (c) The difference between prohibited goods and restricted goods. (d) What uncustomed goods are in relation to customs laws.

Question 4 The changes in the strategic landscape of customs operating environment together with long term growth in trade and travel volumes have affected the way customs administrations are managed and approach their tasks. These developments have led customs administrations to seek a more structured and systematic way to manage risks. As a tax risk management expert, you have been asked to educate Uganda customs officials. On the other hand, warehousing of goods is a customs procedure whereby goods liable to import duty may on first importation be warehoused without payment of duty in a Government warehouse or a bonded warehouse.

Required: Prepare presentation highlighting the following: (a) The meaning of customs risk management. (b) Any 5 main priority areas in the strategy to improve customs risk management. (10 marks) (d) Difference between a customs bonded warehouse and a government warehouse. (d) Advantages of warehousing. (5 marks)