- Uganda is reviewing some of its tax laws to accommodate a regional approach.
Ugandan-tax administration has eliminated the Value added Tax (VAT) placed on imported rice from Tanzania to facilitate economic growth in the East African region.
This came into effect two weeks after Uganda’s Presidency through President Yoweri Museveni urged all the seven East African Community (EAC) member states to scrap all non-tariff barriers, saying they were hampering economic integration and development in the region.
In a July 29 letter addressed to the customs staff, the Assistant Commissioner for Trade at Uganda Revenue Authority, Mr. Alexander Rubanda stated that all rice imported from the Republic of Tanzania and with a certificate of origin according to preferential treatment will effective July 27 attract no import duty by paragraph 1(L) of the third Schedule to the VAT Act and Article 15 of the Protocol establishing the East African Community Customs Union.
During his address to journalists yesterday, the secretary general of Kampala Rice Traders Association, Mr. Robert Ssentongo, praised the government for eliminating the VAT of Ush180,000 ($47.09) per tonne of rice, which he said was affecting traders.
He also mentioned that the Parliamentary Committee on Tourism, Trade, and Industry had recommended in their report that the Rice and Agribusiness Development Foundation (RADFO) cease to request money from rice traders at various border points.
Ugandan-Tax: Committee Report
During their investigations, the MPs took a fact-finding field visit to the Mutukula Border (from August 3 to August 6) where they interacted with various stakeholders and discovered that traders are being forced to pay a tax amount of Shs180,000 ($47.09) per tonne of rice, in addition to paying a withholding tax of 6% to the URA.
According to the August parliamentary committee report on the alleged unfair trade practices in the rice subsector, RADFO has been colluding with URA officials to charge rice importers a tax amount of Ush180,000 ($47.09) per tonne of rice imported as opposed to the sum of Ush4,000 ($1.05) which they were paying initially.
The committee recommended that civil action be taken against RADFO to collect compensation amounting to Ush17.8b ($46.5 billion) which was illegitimately obtained from traders.
On the 5th of May, the Speaker of Parliament commended the Tourism, Trade and Industry Committee to check the alleged unfair trade practices following a petition by the traders.
As he stressed the need for East African Community member states to allow free trade recently, President Museveni stated that he had previously revealed to Tanzania’s president, Samia Suluhu, that a while ago, some local farmers tried to pressure him into imposing a tax on imported rice so it would be costlier than the locally produced one but he declined because of the importance of free trade.
According to statistics from the Ministry of Trade, Uganda consumes about 300,000 tonnes of rice a year and this demand has largely been supplemented by imported rice.
Ugandan-Tax: Minister’s letter
On April 21, the Minister of State for Trade, Ms. Harriet Ntabazi, wrote a letter to the Commissioner of Customs at URA, Mr. Abel Kagumire, instructing him to hold off on eliminating VAT-exempt rice imports until further notice. She further told him that the ministry would reach out at a later date and give further instructions regarding the matter.
On April 27, the deputy commissioner for Customs, Mr. Julius Mponooka, wrote an internal memo approving that half of the clearing VAT exempt rice from Tanzania. However, the directive was reversed a week later by Mr. Kagumire when he appeared before the committee on August 1, 2022.
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