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Valid certificates of origin key in taxing imports, Judge rules
What you need to know:
- This ruling stemmed from an appeal against the TAT's decision, in which Kuku Foods Uganda Limited opposed the tax body's refusal to grant preferential tariff treatment to shipments of French fries imported from Egypt.
For an importer to receive preferential tariff treatment in Uganda for goods imported from a COMESA member state, those goods must always be accompanied by a valid certificate of origin, properly filled out and authenticated, the High Court has ruled.
“Finally, it (certificate of origin) should contain the declaration by the exporter, by way of a stamp and an original signature, that the details in the first boxes are true and correct and that the goods in the consignment originate from the named country of origin,” held Justice Patricia Mutesi of the Commercial Division of the High Court.
A certificate of origin is a document certifying the country where an imported commodity originated, widely used in international trade transactions and essential for determining applicable taxes.
The Court in its judgment made on July 30, 2024, determined that the primary responsibility lies with the importer to provide documents that comply with the law, while the Uganda Revenue Authority (URA) is responsible for receiving, reading, and analysing these import documents, including certificates of origin.
“The duty of presenting proper certificates of origin is not shared or transferable and even when the respondent (URA) ventures into the formal verification process, such action does not override the importer’s enduring duty to avail proper documentation,” the judge held.
She ruled that URA is not obligated to accept requests for additional verification from the importer, as any certificates lacking the original signature of the exporter are invalid, thus eliminating any possibility of their acceptance.
“In practical terms, it would be very expensive in terms of time, money and other resources. If the respondent (URA) is to be legally-obligated to make a formal verification query for each and every defective certificate of origin under the COMESA trade regime. Instead of dedicating its resources to its main job of collecting revenue and widening Uganda’s tax base, the respondent would have to strain those resources engaging customs authorities all across the COMESA membership looking for clarifications on defective certificates of origin,” held Justice Mutesi adding that it is unsustainable and unacceptable.
The ruling arose from an appeal by Kuku Foods Limited, a beverage firm challenging the Tax Appeals Tribunal (TAT) decision favoring the URA due to the company’s failure to present properly signed certificates of origin, resulting in the denial of preferential tariff treatment.
Kuku Foods Limited, a franchisee of KFC, appealed the TAT's ruling that an unsigned certificate of origin automatically invalidates its validity. The Tribunal stated that without a valid certificate conclusively proving that an imported good originated from a COMESA member state, the URA is not obligated to grant preferential tariff treatment.
Justice Mutesi upheld the TAT's decision, asserting that an exporter’s failure to sign a certificate of origin represents a significant flaw in the documentation.
“…an error on the statement of the country of origin, the name of the exporter or the declaration of the correctness of the certificate goes to the very heart of the certificate and incurably undermines its essence since it negates origin which is the normative basis of preferential tariff treatment in law,” the judge ruled.
Justice Mutesi agreed with the URA’s argument and stated that the only acceptable evidence which is utilized to confirm entitlement to the COMESA preferential treatment is a duly signed certificate of origin.
“Since the appellant (Kuku Foods Limited) failed to adduce proper certificates of origin for the impugned consignments of French fries, the respondent (URA)b was unable to conclusively determine whether or not those goods had originated from a COMESA member state, as such a determination can only be based on a valid certificate of origin,” the court held.
In dismissing Kuku Foods Limited’s appeal, Justice Mutesi noted that the URA was correct in assessing the company as liable for the import duties, upholding the assessment in its objection decision.
This ruling stemmed from an appeal against the TAT's decision, in which Kuku Foods Uganda Limited opposed the tax body's refusal to grant preferential tariff treatment to shipments of French fries imported from Egypt.
The court heard that in May 2018, the URA conducted a post-audit review of the beverage company’s imports concerning seven certificates of origin that had not been duly signed by the exporter. This led to an assessment of import duty amounting to Shs191,038,404 due to the invalid certificates.
