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Traders want the implementation of EFRIS halted; the VAT threshold raised from Shs 150 million to Shs. 1 billion and import duty on fabrics and garments reduced
President Museveni is this Friday morning expected to meet with the leadership of Kampala traders who are protesting the enforcement of the Electronic Fiscal Receipt and Invoicing Services (EFRIS) system.
The traders commenced their strike, which has seen the majority of shops in downtown, closed since 08 April 2024.
Today’s meeting will be held at State House Entebbe.
ChimpReports understands several cabinet ministers and key stakeholders have been invited to take part in the meeting aimed at resolving the traders’ concerns.
During the meeting with the Ministry of Finance officials on April 16, 2024, traders expressed concern that 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.
The traders have maintained locks on their businesses, with some saying the meeting at the Ministry of Finance did not resolve their issues.
Traders also want the Government to consider increasing the VAT threshold from Shs 150 million to Shs. 1 billion and a reduction of the VAT rate from 18% to 16%.
They argued that the import duty of USD3 and USD3.5 per kilogram or 35%, whichever is higher, for textile fabrics and garments respectively is very high.
During the plenary session on Thursday, Minister of State for Industry, Hon. David Bahati, said the government will make considerations on capitalising Uganda Development Bank so as to curb the high interest rates charged by money lenders, thereby affecting business sustainability of traders.
Speaker, Anita Among, challenged the Ministry of Finance to simplify tax payments, if compliance is to be achieved.
“You do not have to brutalise people to collect money. Trust in the government will be lost and yet at the same time we expect to collect this money from these people. Some people do not even know what they are paying for and the taxes they are paying,” Among said.
Leader of the Opposition, Joel Ssenyonyi, called for a halt on the EFRIS system, saying that it has not been understood by many, with traders seeing it as double taxation.
“What is so hard about the government suspending it for even a month? There is nothing you lose as a government so that you can engage with traders. We can put EFRIS on halt because they are finding the implementation problematic,” he said.
Valuation
In the meeting at the Ministry of Finance, traders also protested the non-standardized valuation guidelines for goods, arguing that Uganda Revenue Authority (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 World Trade Organisation (WTO) customs valuation and in special circumstances where values cannot be determined, URA should provide value guidelines on an annual basis,” reads a statement issued by Finance Minister, Matia Kasaija on Wednesday.
Further, traders expressed concern over anti-competition practices by manufacturers, saying that some of them, notably foreign investors, are participating in distribution, wholesale, retail, and hawking of their products.
This, they said, results in undercutting prices and thus low sales for the Ugandan traders, which goes against the principles of fair competition.
Competitiveness
Traders also argued that Uganda has lost its competitiveness as a trade hub for the region, noting that traders from Congo, Rwanda, South Sudan, 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.
It was agreed during the meeting that URA shall exercise more sensitivity in the enforcement of EFRIS and shall accordingly exercise restraint with regard to the issuance and enforcement of penalties for the non-compliance to EFRIS, so as to give all taxpayers 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,” said Kasaija.
The Ministry of Finance said it would, within the next two weeks, study and consult on the proposal to increase the current VAT threshold and the VAT rates, and communicate the Ministry’s position on the matter, taking into account the findings from the study and relevant consultations.
The traders also undertook to provide their input on the matter.
Source: Chimp Reports