Kasaija Urges Merchants to Open Stores While Government Handles Their Problems
Kasaija urges merchants to open stores as government addresses their issues.
The Minister of Finance, Hon Matia Kasaija, has assured traders that the government is ready to resolve their concerns. This follows his meeting with the traders on Tuesday.
The traders, under their umbrella body, Kampala City Traders Association (KACITA) commenced a strike which has seen several shops in down town Kampala closed since 08 April 2024.
Among other challenges, the traders are protesting the enforcement of the Uganda Revenue Authority’s (URA) Electronic Fiscal Receipting and Invoicing Solution (EFRIS) system, saying that they were not sensitised and also lack the requisite infrastructure to use the system.
Hon. David Bahati, the Minister of State of Trade, Industry and Cooperatives (Industry), informed Parliament during plenary sitting on Tuesday, 16 April 2024 that should the Executive make a break through, a statement will be presented to Parliament on Wednesday, 17 April 2024.
In his statement, Kasaija appealed to the traders to open their shops and give the government time to conclude the consultations on the issues raised.
VAT
The traders requested that Government should consider increasing the VAT threshold from Shs150 million to Shs. 1 billion and a reduction of the VAT rate from 10% to 16%.
Electronic Fiscal Receipting and Invoicing System (EFRIS)
The traders expressed concerns that the Electronic Fiscal Receipting and Invoicing System (EFRIS) presents several challenges, notably: it imposes a high cost of compliance; most traders don’t understand the system; and it applies to all traders irrespective of whether they are VAT registered or not.
Import Duty on Fabrics and Garments
The traders argued that the import duty of USD3 and USD3.5 per kg or 35% whichever is higher for textile fabrics and garments respectively is very high.
Non-standardized valuation guidelines for goods
The traders argue that URA gives different values to different importers and at different times, for the same imported items. They noted the need for certainty and uniformity about the tax liability on imports.
They further recommended that URA should, as much as possible, use valuation methods consistent with the WTO customs valuation and in special circumstances where values cannot be determined, URA should provide value guidelines on an annual basis.
Anti-competition practices by manufacturers
The traders argued that some manufacturers, notably foreign investors, are participating in distribution, wholesale, retail, arid hawking of their products.
This results in under cutting prices and thus low sales for the Ugandan traders, which goes against the principles of fair competition.
Loss of Uganda’s competitiveness as a trade hub for the region
The traders argued that Uganda has lost its competitiveness as a trade hub for the region.
They noted that traders from Congo, Rwanda, South Sudan, and Burundi now prefer to buy from Kenya and Tanzania because the prices in those countries are much lower than prices in Uganda on account of differences in taxation of imported products.
Kasaija explains
Kasaija promised that his ministry will within the next two weeks, study arid consult on the proposal to increase the current VAT threshold and the VAT rates, arid communicate the Ministry’s position on the matter.
“URA shall continue to implement the EFRIS. However, emphasis shall be placed or sensitization and handholding of tax payers to appreciate the EFRIS and also ensuring that it is demystified among all tax payers.”
To that end, URA shall with immediate effect establish an office in Kikuubo that is solely dedicated to providing EFRIS support services to all traders and oilier tax payers, exercise more sensitivity in the enforcement of EFRIS and shall accordingly exercise restraint with regard to the issuance and enforcement of penalties for the now-compliance to EFRIS, so as to give all tax payers time to appreciate the EFRIS system.
The Commissioner General URA shall submit the list of traders currently having outstanding EFRIS penalties for Hon. Minister’s Consideration for possible waiver in accordance with the law.
Regarding the anti-competition trade practices by manufactures, Kasaija said the Ministry of Trade, Industry and Cooperatives (MTIC) is finalizing the Regulations to implement the Competition Law that was recently assented to by the President.
The Ministry of Trade, Industry and Cooperatives has also issued a Circular to Kampala Capital City Authority, and all Chief Administrative Officers and Town Clerks, directing them to ensure compliance with the provisions of the Trade Licensing Act which prohibits the licensing of non-citizens as hawkers.
“It was agreed that traders shall immediately resume normal business as Government concludes internal consultations and further engagement with the leadership of the traders. The consultations shall be concluded within two weeks,” reads Kasaija’s statement.
