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Inside Museveni talks that ended traders’ protest

Vaseline 2 months ago

After six hours of waiting, 61 hand-picked traders finally met President Museveni at State House Entebbe on Friday. The meeting did not end until about midnight. Most importantly, Museveni deftly played his cards to ensure that the key players in a stalemate that paralyzed the business world for days – the traders and the tax man – emerged with a sense of victory.

“We have partially won,” said a trader Sunday monitor on Saturday.

Mr. Ibrahim Bbosa, the Assistant Commissioner of Taxation in charge of Public and Corporate Affairs, was quick to clarify that “the President also made it clear that he would not tolerate any form of tax non-compliance.”

We have gathered that the leadership of various trader associations attended the Friday showdown talks at the State House. Some leaders were from Kampala Capital Traders Association (Kacita), Federation of Uganda Traders Associations (Futa), United Arcades Traders and Entrepreneurs Association (Uatea) and the Uganda Dealers in Used Clothes and Shoes.

Also present were Ministers of Finance and Kampala, as well as officials from the Uganda Revenue Authority (URA).

Outcome of conversations
The focus of the talks, said a trader association leader, was on the “unfair value added tax” or VAT, the “crude” implementation of the electronic tax receipt and invoicing system (Efris) by the tax authorities, the $3 and $3.5 per kilogram import duty on fabrics and clothing and withholding tax, as well as Chinese shops in central Kampala.

“On the VAT, the president realized that it is a confusing tax because his opinion was the same as that of the traders, but he said he would not rush to a decision (and) he told us that (government technocrats) are going to study and analyze it . so that by (May) 7 when he meets us, he should come up with a conclusive solution,” Dr Thadeus Musoke Nagenda, the Chairman of Kacita, said yesterday.

He added that Mr Museveni also ordered an immediate cessation of enforcement of Efris and immediate suspension of sentences. URA was also not allowed to issue new ones or collect the ones already issued.

Efris storm
The alleged rough enforcement of Efris by URA officials largely prompted Kampala-based traders dealing in merchandise, clothing and apparel, among others, to close their shops. The system was rolled out by the tax authorities on January 1, 2021, as an automated compliance process that requires all VAT taxpayers whose businesses generate an annual turnover of over Shs150 million to register for it. It includes the use of Electronic Fiscal Devices (EFD), issuing e-invoices and e-receipts so that URA can easily track real-time transactions.

Traders protested, saying they were unaware of its functionality. They added that URA’s enforcement of it made it unbearable.

“The only outstanding issues are the value of 35 percent and $3 and $3.5 percent per kilogram, but on others it is as if the president gave the traders a breathing space and then we decided to operate while other issues were resolved,” Dr. .Nagenda. Sunday monitor yesterday.

Museveni speaks out
Confirming the meeting with the traders, Mr Museveni posted on his official proposed the current annual turnover of Shs150 million as well as manufacturers engaged in wholesale and retail trade – came up for discussion. The President noted that he had asked the traders for some time to give him the opportunity to conduct research and make informed decisions.

Mr Museveni will hold a consultative meeting with technocrats from the Ministry of Finance, URA and others on April 24. Thereafter, the President will meet all traders at the Kololo Independence Ceremonial Grounds where a final decision on all matters will be taken.

“In the meantime, I have directed that the URA refrains from imposing fines and recovering fines already imposed, but taxpayers should continue to pay their taxes as usual,” President Museveni wrote on X.
Traders told it Sunday monitor that no minister was given the opportunity to speak at Friday’s meeting. Only Mr John Musinguzi Rujoki, the Commissioner General of the URA, gave his two cents and explained the taxes and their values ​​to the President.

VAT under scrutiny
Mr Rujoki, we were told, justified why VAT is charged four times – that is, on the manufacturer/importer, the wholesaler, the retailer and the end consumer.

“The president asked (Mr Rujoki) why VAT is not charged once at the factory or upon import, but he said the country will lose a lot of taxes if that happens,” said Andrew Rubeihayo, chairman of the Uganda Dealers in Used Clothes. and Schoenen who attended the meeting said.

On Thursday, Dr Nagenda told this publication that every importer or manufacturer adds the 18 percent VAT on the products, which they pay to URA. The chain, he noted, goes further, as the wholesaler who buys the products also adds the cost excluding VAT, a profit margin and 18 percent VAT.

“In principle, the VAT payable is the output VAT minus the VAT input of the importer/manufacturer. In simple calculations, this amounts to charging 18 percent VAT on the profit,” says Dr. Nagenda.

According to traders who attended the meeting, this concern is one of many that will be addressed during their meeting with Mr Museveni on May 7.

The President revealed on

He added: “Should we continue to hemorrhage the little we have earned through agriculture and other sectors by sending our money abroad? Uganda should not be a supermarket for other countries.”

Mr. Ibrahim Bbosa, the spokesperson of the URA, confirmed the developments and said the way forward will be given by the Kololo President after the meeting with technocrats.

“The president listened to the traders’ complaints and promised to study them further. He also expressed his desire to avoid wrong decisions being made as he was being hunted by the traders,” Bbosa said.