Ugandan Traders Protest Tax System as Government Seeks Compromise

Tensions are high in Uganda as traders in Kampala, under the Federation of Uganda Traders Association, protest what they call an "unfair tax regime" imposed by the Uganda Revenue Authority (URA). The traders, particularly those in the downtown Kikuubo area, have been on strike since April 8, 2024, citing a lack of sensitization and infrastructure for the recently implemented Electronic Fiscal Receipt and Invoicing Services (EFRIS) system.

The EFRIS system, which requires businesses with an annual turnover of at least 150 million Ugandan Shillings or daily gross sales of 420,000 Ugandan Shillings to issue electronic receipts and invoices, has been met with strong opposition from traders who argue that it is cumbersome, costly, and gives the government too much control over their businesses. Some shops have even been forced to close due to the heavy penalties associated with mistakes in using the system.

In response to the protests, the government, through the Ministry of Finance and Ministry of Trade, has agreed to establish a URA office in Kikuubo to provide EFRIS services and support to traders. They have also pledged to exercise more sensitivity in enforcing EFRIS and consider waiving penalties for non-compliance to give traders time to adapt to the system.

Traders have also requested an increase in the VAT threshold from 150 million to 1 billion Ugandan Shillings and a reduction in the VAT rate from 18% to 16%. The government has agreed to consult on these proposals, as well as review import duties, which traders claim are unfairly assessed and collected, particularly on textiles and garments.

However, some lawmakers have criticized the government's approach, calling for a halt in EFRIS implementation to allow for better engagement with traders and a review of the Tax Procedures Code that gives the URA Commissioner General broad powers to regulate the system. The Chairperson of the Finance Committee of Parliament, Amos Kankunda, has warned stakeholders against politicizing tax revenue collections, stating that it will affect service delivery and development in the country.

Despite efforts by the government to persuade traders to engage in dialogue, they remain steadfast in their demand to meet with President Museveni before resuming business operations. Joseph Kabuleta, the head of the National Economic Empowerment Dialogue (NEED) party, has cautioned the traders against high expectations from the upcoming meeting, highlighting the existing divisions among the traders that may weaken their bargaining power.

As the standoff continues, the Speaker of Parliament, Ms Anita Among, has raised concerns about the implementation and enforcement of the EFRIS system, noting the need for more education and consultation with traders. The state minister of finance, Mr Amos Lugoloobi, acknowledged the need for more sensitivity in the enforcement of EFRIS and said the Commissioner General of URA will submit a list of traders with outstanding EFRIS penalties for possible waiver.

The outcome of the upcoming meeting between President Museveni and the traders holds significance for the trading community, but the path forward remains uncertain due to the divisions and skepticism surrounding the efficacy of the protests. The government and traders must find a compromise that balances the need for effective tax collection with the concerns and challenges faced by businesses in adapting to the new system.

Key Takeaways

• Traders in Kampala protest "unfair tax regime" imposed by Uganda Revenue Authority (URA).
• Traders oppose new Electronic Fiscal Receipt and Invoicing Services (EFRIS) system as cumbersome and costly.
• Government agrees to establish URA office in Kikuubo and consider waiving EFRIS penalties for traders.
• Traders request VAT threshold increase and reduction, as well as review of import duties.
• Outcome of meeting between traders and President Museveni crucial for resolving the standoff.