The Uganda Revenue Authority’s (URA) new directive requiring traders to pay taxes on imported goods at the port of Mombasa, Kenya, has sparked controversy and concern among Kampala traders. The traders argue that this move will impose additional financial burdens on them, particularly for those still recovering from the COVID-19 pandemic.
The traders’ main grievances center around the additional costs and cash flow challenges that this new directive will impose. They claim that paying taxes at the point of entry in Mombasa will increase their costs, which may be passed on to consumers. Furthermore, paying taxes before goods reach Kampala will affect their cash flow, making it difficult for them to manage their finances.
URA justifies the new directive by citing Regulation 64(k) of the East African Community Customs Management Regulations, 2010. According to URA, this regulation requires taxes to be paid at the first port of entry into the East African Community. URA argues that this move is part of the Single Customs Territory arrangement, aimed at simplifying trade and reducing costs.
The new directive may have significant implications for traders, particularly small and medium-sized enterprises. The additional costs and cash flow challenges may disrupt business operations and exacerbate economic challenges. Traders are already struggling with high taxes, costly Electronic Fiscal Receipting and Invoicing Solution (EFRIS) implementation, and other economic challenges.
To address the concerns of traders, URA should engage in dialogue with them to understand their grievances and provide clarity on the new directive. URA should also consider sensitizing traders on the benefits of the Single Customs Territory arrangement and the new tax system. A review of the directive’s impact on traders and the economy may also be necessary to identify areas for improvement.
The URA’s new container tax directive has sparked controversy and concern among Kampala traders. While URA justifies the move as part of the Single Customs Territory arrangement, traders argue that it will impose additional financial burdens on them. To resolve this issue, URA should engage with traders, provide clarity on the new directive, and consider reviewing its impact on the economy. By working together, URA and traders can find a solution that balances revenue collection with the needs of businesses.
