Kampala traders petition govt over taxes on textiles

The Kampala City Traders’ Association (Kacita) has petitioned the ministries of Finance, Trade, and commissioner-general of Uganda Revenue Authority to rescind the new tax policy, saying it has increased the cost of importation of textile products.

The traders say the new tax policy has placed a heavy burden on the traders who have since abandoned their goods at Mombasa Port in Kenya.

In a February 12 petition, traders want members to clear their goods based on the transaction value as opposed to weights, which they said will be in line with General Agreement on Taxes and Tariffs (GATT) valuation, as signatories of World Trade Organisation (WTO).

“Please also in research, endeavour to establish the different types of materials demanded for in the market and compare the same with what can be supplied by our local manufacturers; again in the research, establish the number of jobs which are created by the importation of these materials and hence those who will be rendered jobless,” the petition in part reads.

Mr Thaddeus Musoke, the secretary general of Kacita, told journalists in Kampala yesterday that if government does not stop the implementation, many traders will suffer huge losses which will drive them out of business.

“We have got several petitions from business community due to the increase of taxes when the economic situation in the country is very badly off. You’re aware that Covid-19 has affected the business community negatively unfortunately government has increased taxes in almost all major ‘sectors,” Mr Musoke said.

Changes

Under the new policy, the tax rates of textiles were increased to 35 per cent as import duty from 25 per cent, and to $5 per kilo on the imported textile materials.

Mr Musoke said the implication is that imports that were cleared at about Shs30 million to Shs40 million, now clears at taxes of between Shs300m and Shs400 million.

“Indeed, this is prohibitive and by no imagination can we assume that the increment in the taxation represented a mark-up. This, therefore, explains why the importers have abandoned their merchandise,” Mr Musoke said.

He said Uganda is a signatory to the WTO where imports are valued on the basis of General Agreement on Taxes and Tariffs valuation where goods valuation is based on transaction value.

He said in all the provisions of the GATT valuation, there is nowhere, where it is provided that goods will value be on the basis of weights, except for used items, whose transaction value cannot be readily established.