Kampala City Traders Association (KACITA) has given the government a two weeks ultimatum to stop the implementation of the 35% import duty on garments and maintain the 25% import duty.
Recently, Matia Kasaija, the Minister of Finance, directed the Uganda Revenue Authority (URA) to clear textile traders who had ordered their goods between July 1 and December 30, 2020, at a 25% tax rate instead of the 35% or $5 per kilo tax rate.
KACITA had asked the government to repeal the National Taxation Textiles policy which gives URA power to levy $5 per kilogram on import duty as opposed to the known per invoice charge.
The policy had started to bite after the expiry of the grace period (July 1 and December 30) which was set by the government to allow traders who had ordered for stock in the old tax regime of 25% clear them and switch to the functionality of the new tax.
Speaking to the media in Kampala, the acting chairperson of the association Thadeus Musoke Keno Nagenda said that because of this increment many importers have abandoned their merchandise to rot from the warehouses and at the ports.
He said that this tax is unaffordable to locals, instead it favours the foreigners who have business in the country.
“A container which was being cleared at about Shs80m to Shs100m now clears from between Shs280m and Shs300m. There is no way how the new tax can be implemented when many traders are still grappling with the effects of the pandemic,” Nagenda said.
He said that they petitioned the government and held negotiations several times but all in vain, threatening that failure to comply with their request they will hold their peaceful protests.
“We shall close our businesses starting September 1, 2021 or we shall use other means to express our dissatisfaction because there are many of our members who had made orders and others had put their goods on the high seas without the knowledge of the new policy arrangements,” he said.
He noted that it’s unfortunate that the government is failing the local business but also sending its citizens to poverty moreover after COVID-19 challenges.
In order to protect business KACITA has advised the government to revise this law as soon as possible given the current situation where businesses are struggling given the impact of the pandemic.