By Temporary suspension of the implementation of Electronic Fiscal Receipting System (Efris) for at least one year, a review of different taxes, and immediate removal of foreigners especially Chinese from shops in downtown Kampala are some of the key issues traders say President Museveni must address in today’s meeting with them.
The traders, who have failed to agree with Finance, Planning and Economic Development ministry and its Kampala metropolitan counterpart, in two successive meetings, said it is only President Museveni who can listen and solve their grievances.
On Tuesday, Finance Minister Matia Kasaija, Trade Minister Francis Mwebesa and the Commissioner General of the Uganda Revenue Authority (URA) failed to agree with the leadership of traders as they asked for two weeks to have their issues looked into yet the latter wanted an immediate intervention.
This prompted them to continue with the strike which started on Monday this week.
In a statement, Mr Kasaija said the meeting agreed to continue implementing Efris, which is a centre of this demonstration.
He tasked URA to open up an office in downtown Kampala (Kikuubo) and sensitise traders, exercise restraint towards its enforcement, and forgive those with outstanding penalties.
But different association traders’ leaders told reporters after the meeting that the meeting with Mr Kasaija did not yield any positive results because he did not offer solutions to their problems, prompting them to continue with the strike until they meet Mr Museveni.
“The Museveni I know is confident and will meet the traders and allow them to explain their views, discuss with them, and solve this issue because he has ever done it in 2012. I hope for the same to happen,” Mr Isa Ssekito, the spokesperson of the Kampala Capital Traders Association (Kacita), said.
Efris
The Efris, whose rough enforcement by officials from URA, prompted traders across different sectors to close their shops since April 16.
The taxman rolled out the Efris, an automated compliance process on January 1, 2021 mandating all Value Added Tax (VAT) taxpayers whose business makes more than Shs150m annual sales to enrol on it.
The system entails the use of Electronic Fiscal Devices (EFD), issuing e-invoices, and e-receipts so that it is easy for URA to track real-time transactions.
The Kacita Chairperson, Dr Thadeus Musoke Nagenda, said the abrupt implementation of this system among “ignorant” traders, coupled with the introduction of other unfair Withholding Tax, and unfair customs and domestic taxes, left their businesses on the edge of collapse.
“As taxpayers, we have had unresolved issues with URA and as a result, we have petitioned URA commissioner general, Finance ministry, the Parliamentary Committee on Trade, and also had interactions with them several times but all efforts have been futile,” he said.
Effects
Efris, he said, contradicts the privatisation policy as it gives the government 90 percent of power to control traders’ businesses, making it rough to the traders, and forcing some of them to unceremoniously quit, leading to unemployment.
“It is in agreement that not all VAT taxpayers have enroled on the Efris. Despite that URA came up with hefty penalties of Shs6m per any cash sale receipt encountered, the business community has observed selective application of the law, and many traders have fallen victims, with some having had to close shops,” he said.
Traders who spoke to this publication yesterday, said President Museveni should consider their situation and order an immediate suspension of Efris to allow URA to first sensitise the public before it is rolled out.
Mr Ryan Mulindwa Kibedi, the assistant secretary general of the United Arcades Traders and Entrepreneurs Association (Uatea), said the system is very good because it promotes transparency but its implementation is extremely bad.
“In arcades, we don’t get cash immediately. For example, a trader can send their products to a client in an upcountry district and then collect money later. The system does not put that in consideration as URA officials are just on gates ready to check whatever comes out,” he said.
Taxes
Import duty, VAT on importation, Infrastructural Levy, Environmental Levy, Withholding Tax, and VAT after sale, are some of the taxes importers of second-hand clothes or shoes have to pay to complete a single transaction.
“If we are to sit and start telling you what we go through, you can’t believe it. That is why we advocate for an entire revision of our taxes because we are experiencing hell on earth in the hands of URA,” Mr Andrew Rubeihayo, the chairman of the Uganda Dealers in Used Clothes and Shoes, said.
Dr Nagenda added that every importer or manufacturer adds the 18 percent VAT on the products, which they remit to URA.
The chain continues as the whole seller who buys the products also adds the cost net of VAT, a profit margin and 18 percent VAT.
Much as URA says the VAT is passed on to the final consumer, Dr Nagenda said all the people in the chain including the importer, manufacturer, wholesaler, retailer and final consumers pay it.
URA, according to the computation analysis Nagenda shared with this publication, collects Shs23.9m VAT out of the products worth Shs100m, from the four individuals.
“Taxpayers are subjected to unfair assessments because assessments are not field-based. URA assessors assess from their office and not at the business premises. It further stretches to the objection team that they too are office-based,” he said.
But appearing on UBC TV’s Behind the Headlines programme on Wednesday, the URA Commissioner General, Mr John Musinguzi, said VAT is only paid by the final consumer in contrast to what traders are saying.
Another tax under contention is the Withholding Tax which is collected from informal traders by URA’s agents.
Traders also want Mr Museveni to order immediate suspension of $3 and $3.5 per kilogramme tax on fabrics and garments, respectively.
This, they said, has increased the smuggling of the same items from the neighbouring countries, as well as increasing the number of abandoned and uncleared containers at URA.
“We pray that the import duty gets back to 25 percent,” Mr Nagenda said.
Trade chain violation
The influx of Chinese investors, who are operating shops downtown, is also another issue traders want addressed because it has ended up in open competition with the local players through opening up both distribution, wholesale, as well as retail shops in addition to hawking to all upcountry areas.
The Deputy Presidential Press Secretary, Mr Faruk Kirunda, said: “Yes, it’s true that the President will meet traders tomorrow(today). However, I wouldn’t wish to pre-empt the outcome of the meeting but I am sure it will be beneficial as you know our President’s experience and brainstorming abilities. What’s important is for him to meet with different stakeholders, diagnose the problem and determine a healthy way forward. Let everyone come with an open mind and contribute reasonably to the discussions. PPU will inform the public on outcomes from the meeting.”
Other demands
1. Empowering local manufacturers to enable them supply enough and quality products, especially in textiles before limiting importation.
2. Traders want to be given a seat in Parliament so that they choose their representative who will front their issues.
- Review of ledgers and reverse the penalties and fines assessed on traders, as well as reevaluate traders who were enrolled on VAT illegally.
4. Revision of high interest rate (18-36 percent) that makes the cost of business financing unfavorable.
5. Adequate business support especially to Small and Medium Enterprises (SMEs).
