Kampala, Uganda | THE INDEPENDENT | As the government moves to meet traders over an impending strike by importers of textile and textile products over taxes, the Ministry of Finance, Planning and Economic Development, and the Uganda Revenue Authority are accusing the traders leadership of dishonesty.
Kampala City Traders Association, KACITA has called on their members to stay home on September 1, unless the government responds to their demands.
URA insists that importers of textile and garments products have increased their tax compliance levels since the government waved some duties earlier this month.
It says that there are now 125 containers pending clearance, and not 700 as given to the media by Kampala City Traders Association, KACITA at the weekend.
Since the waiver earlier this month, of the 3 and 3.5 dollars per kilogram on imports of textile and garments respectively, that cannot be produced locally, nine containers have been cleared as a result.
“We are in possession of 125 containers and so far, 9 have been cleared due to the new tax regime as pronounced by the Minister of Finance, Planning and Economic Development,” says URA spokesman Ian Rumanyika, adding that KACITA’s claims are far from the truth.
This comes as the Minister of Finance is due to meet the traders this week to discuss the matter.
“Finance Minister Matia Kasaija will meet traders this week regarding their petition against the tax regime for textiles and garments. Tax on imported garments is at 35% or 3.5 a kilogram whichever is higher and for textile fabrics at 35% or 3.0 per Kilogram, whichever is higher,” says Apollo Munghinda, Principal Communications Officer at the ministry.
The meeting is expected to try to avert an impending strike by Kampala City Traders Association, if the demands for a review of the taxes are not met by the Ministry by September 1.
The traders say the new tax policy on garments and textile materials imports have led to more than double the tax burden. “A 20 foot container which was cleared at about Shs80-100m is now being cleared at Shs280-300m,” says KACITA.
However, URA refuted this, adding that the category affected by the per-kilogram duty account for just 10 Percent of the total garment and textile imports. “The current tax regime on textiles is informed by the fact that Uganda continues to import large quantities of finished textiles and related products worth about 231 million dollars, which results in an outflow of foreign exchange and also donation of jobs to foreign textile industries,” the ministry says.
The traders are also accused of dishonesty by playing that there is an increase in the tax rates this year. “The 35% was the tax rate applicable on textile for the Financial Year 2020/2021 and therefore the status quo has been maintained. This number is expected to grow as more traders realize that the rate has been maintained as it was last financial year,” says Rumanyika.
The traders, who support the industrial action, say the new tax regime is kicking them out of business. These textiles account for 90% of the clearances by the textile and garments traders, according to Uganda Revenue Authority, URA.
“However, the textiles and garments that can be sourced locally from Ugandan manufacturers, which account for 10% of the imports by the traders shall be maintained at the rate of 35% or 3 dollars per kilogram for textiles or 35% or 3.5 dollars per kilogram for garments as approved by the council of Ministers under the East African Community Gazette Legal Notice No. EAC/118 /2021,” says URA.
On whether they intend to consider reviving the policy, Rumanyika says the engagements between government and the traders continue. “The Government of Uganda is continuing to engage the leadership of KACITA and all the other traders’ associations to achieve a shared appreciation of this position and the collective benefits that come with it,” he says.