Rice Merchants Condemn Taxes at the Mutukula Border

Rice merchants have petitioned the Trade Committee to intervene in a decision to stop their importing of rice without paying Value-Added-Tax (VAT).

This is in response to a request from the Deputy Speaker, Thomas Tayebwa, to the Ministry of Trade, Industry, and Cooperatives to send a letter to rice dealers allowing them to import rice across the Mutukula border without encountering any obstacles.

During a House session on Thursday, May 5, 2022, Tayebwa stated that rice traders had petitioned him regarding the Rice Agribusiness Development Foundation (RADFO), a company that had been granted autonomy to import rice via Mutukula, which they claimed was impeding commerce.

On Monday, May 16, 2022, RADFO, along with the Kampala Rice Traders Association, the Rice Millers Council of Uganda, and the Rice Business Sector Association, presented to the trade committee.

Livingstone Ssenyonga of the Kampala Rice Traders Group disclosed that numerous firms that are members of the association had been granted permission to import tax-free rice from Tanzania.

He said that it was unreasonable for the State Minister for Trade, Hon. Harriet Ntabazi, to ask the Uganda Revenue Authority (URA) to recall issued and operational tax-exempt rice importation licenses after traders had already spent money on the rice importation.

The petition states, “The URA directive blocking clearance of VAT-exempt rice imports other than the 15 importers operating under the court order was issued in error, as it appeared to favor exclusively the 15 importers who sued URA.”

In the appeal, the traders noted that, despite the initiative’s intention to enhance local production, they were unaware of any existing domestic rice reserves in Uganda, and that they had failed to purchase locally in an effort to alleviate domestic rice shortages.

“Border officials have demanded that we pay VAT on the rice we import from Tanzania, which has perplexed us. “Rice-transporting trucks are paid exorbitant fees, causing them to linger at the border,” Ssenyonga explained.
“The longer our trucks wait at the border, the more expensive it becomes, and if you add the fee they want us to pay, it will become prohibitively expensive for us to break even,” he continued.

Ssenyonga added that the rice merchants were not informed of the minister’s decision to cease the importation of tax-exempt rice, and that just five of the fifteen enterprises cleared by the minister are currently active.

Some importers have resorted to the five functioning firms free from paying import tax in order to bring in their rice shipments, but at a cost.

He noted that rice importers are required to pay Shs180,000 per tonne of rice, exclusive of the tax that RADFO has been collecting.

However, the traders have been paying Shs220,000 per tonne to the tax-exempt enterprises in order to cross the Mutukula border with their shipments.

“RADCO began charging this fee at the beginning of January 2022, but ceased by the end of March as a result of our petition to the Parliament. Since the previous two days, we’ve been importing tax-free,” Ssenyonga explained.

Moses Ssekandi, the Secretary of RADFO, informed the committee that the foundation was tasked with regulating enterprises that import rice into Uganda.

This was in response to a petition submitted by the Rice Millers Council of Uganda to the Ministry of East African Community Affairs, noting the stifling effect of rice imports on domestic output.

“A kilogram of rice from Tanzania cost Shs2,100 on the Ugandan market in March 2021, compared to Shs2,800 for domestically produced rice. “As a result, Ugandan rice millers could not sell their product profitably,” stated Ssekandi.

He noted that the implementation of a tariff on rice imports improved pricing competition on the market to the benefit of Ugandan rice farmers and millers.

“RADFO began its operations in January 2022, and by February of that year, the price of locally produced rice had risen to Shs2,900 compared to rice imported from Tanzania at Shs3,000,” Ssekandi added.

He stated that due to the government’s goal of import substitution, RADFO fulfilled its mandate at the border by encouraging importers to engage in rice production in Uganda by collecting Shs180,000 each tonne of imported rice.

He informed the MPs that the funds would be used to help importers engage in rice cultivation in Uganda.

Phillip Idro from the Rice Millers Council of Uganda highlighted the need to monitor the importation of rice from other nations in order to offer Ugandan farmers and millers who add value to rice a competitive advantage on the market.

Idro stated, “As farmers and millers who have invested, we would like to see imports regulated so that local farmers may expand production and earn more money.”

The post Rice Merchants Protest Taxes at the Mutukula Border originally appeared on SoftPower News.