Ugandan Traders Resume Business as Government Suspends Tax Penalties

Ugandan traders protest new tax system, government suspends penalties to engage in consultations and find a solution that works for all.

Trim Correspondents
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Ugandan Traders Resume Business as Government Suspends Tax Penalties

Ugandan Traders Resume Business as Government Suspends Tax Penalties

Traders in Uganda have reopened their businesses after a week-long protest against the implementation of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) system by the Uganda Revenue Authority (URA). The protest, which began on Monday and spread across the country, was led by the Federation of Uganda Traders Association (FUTA) in opposition to what they claim is an expensive and unfair tax system.

After a discussion with President Yoweri Museveni at State House Entebbe on April 19, 2024, the government announced a temporary suspension of penalties for non-compliance with EFRIS. The Minister of Trade, Industry and Cooperatives, Francis Mwebesa, stated that the EFRIS system has been suspended, while the URA clarified that only the enforcement against non-compliant traders has been halted.

During the meeting, the traders expressed their concerns about the high cost of compliance with EFRIS, the lack of understanding among most traders, and its application to all traders regardless of their VAT registration status. President Museveni listened to their grievances and promised to study them further before meeting with a larger group of traders on May 7th.

Why this matters: The protest and subsequent government response highlight the ongoing challenges in balancing effective tax collection with the needs and concerns of the business community. The temporary suspension of penalties and promise of further consultations demonstrate the government's willingness to engage with stakeholders and seek a resolution that addresses the traders' grievances while ensuring compliance with tax obligations.

In the meantime, President Museveni has instructed the URA to suspend all penalties and refrain from recovering any penalties that have already been issued. Taxpayers are expected to continue paying their taxes as usual during this grace period, which is intended for the government and traders' associations to engage in consultations until a resolution is reached.

John Kabanda, the Chairperson of FUTA, expressed satisfaction with the outcome of the meeting, stating, "We are happy that the President has heard our concerns and agreed to suspend the penalties. This will give us time to sit down with the government and find a solution that works for everyone." Traders have now resumed their operations, awaiting further developments following the upcoming consultations and subsequent general meeting at Kololo on May 7th.

Key Takeaways

  • Ugandan traders protested new EFRIS tax system, leading to suspension of penalties.
  • President Museveni met with traders, agreed to study their concerns and hold further talks.
  • URA suspended EFRIS penalties, allowing traders to resume business during consultations.
  • Traders expressed concerns over high compliance costs and lack of understanding of EFRIS.
  • Upcoming meeting on May 7th to find a resolution that addresses traders' grievances.