Pay VAT, Efris has no problem- Museveni

President Museveni on Tuesday warned traders against importation of finished goods into the country, arguing that it frustrates the country’s economic growth and development.

“You want me to allow imported products from other countries that don't even want our products to be sold in their markets! That's putting unnecessary pressure on me. We cannot sell our milk to European Union, we cannot sell our sugar, we cannot sell our beef yet our beef tastes better than theirs but they are protecting their beef market. If you want to sell fashion [from foreign countries] then pay tax," Mr Museveni said while addressing traders at Kololo ceremonial grounds, Kampala where they had gathered seeking his audience on what they described as high taxes and Uganda Revenue Authority (URA)’s Electronic Fiscal Receipting and Invoicing Solution (EFRIS).

According to Mr Museveni, the taxes imposed on them are intended to protect the economy and foster development.

“We're looking for taxes mainly in areas that bleed our economy. Our purchasing power is wealth. In our ignorance, we have been giving our wealth to foreigners like Japanese from whom we buy cars. Our money is being wasted on second-hand clothes, computers from outside etc. The NRM line is we have to build our country to stop bleeding our economy," he added.

Mr Museveni also upheld the full implementation of Efris despite the traders' appeal to have it suspended on grounds that it’s unfair to them given the nature of their business operation. The president said traders have no valid excuse to ask for suspension of Value Added Tax (VAT) which the electronic receipting system seeks to enforce. 

According to him, VAT does not affect the traders directly and therefore, it should not be faulted as the costs would be met by the final consumer.

“You talked about VAT. I have studied it and I don't see the danger of VAT because of our big aims as a country and I have shown you that Uganda can stand on its own. I have given you the example of milk, cement, steel bars etc. You can see where we have been able to stand on our own without importing. Therefore, this tax which is partly concentrating on the narrow spectrum of imported products should not be opposed. You would be wrong if you opposed such a tax (VAT). It's true that VAT is paid by the consumers and that's in order because we need taxes to run your country and if it's too expensive the buyers will not buy it. If customers are buying it means the tax is manageable," Mr Museveni added before arguing that his government had suspended on a number of taxes when it took over power.

He further revealed that the tax policy in Uganda is deliberately intended to protect the local economy and fostering the country’s growth.

“It is not true that there are so many taxes in Uganda, the policy of the government on taxes is deliberate, we do not tax what builds Uganda. There was tax on export of coffee when we came from the bush, we abolished it. Show me just one tax on any export. If you import machinery to process things here, you don’t pay any tax. If you import raw materials, you don’t pay tax. There’s what we call intermediate products where you only pay the East African tax of 10%. If you import pharmaceuticals, initially you don’t pay taxes, but in future when we start making our own drugs, we shall have to protect our local manufacturers by imposing taxes even on pharmaceuticals,” he said. 

According to the president, URA should instead help traders learn how to use the Efris machine or install on their smartphone.
“I think you can learn how to use it. But if you don’t want to use it, they say you can use your smart phone. You don’t have to buy an Efris machine of Shs6 million. What’s the cost of a smartphone!? You can use a smart phone and buy a printer of Shs150, 000 to attach to it. Therefore, I direct URA not to insist on EFRIS machine. The ones who can buy it let them buy, but those who can’t afford it should use alternative means. There should not be any penalties for not buying an EFRIS machines," the president said prompting some of the traders to storm out of the venue seemingly disappointed.

Mr Museveni underscored the importance of saying tax, arguing that the traders’ challenge was not whether they should pay the tax but when they should pay the tax. 
“Now I would like to have flexibility, that if you can pay cash pay. If you can’t pay later. I would like your leaders to sit with URA people and fine-tune that part and I can entertain you here on June 20, 2024 to tell us how they have fine-tuned that,” Mr Museveni added amid heckles from his audience.
He also dismissed reports that his government’s economic policies favour foreign investor more than the local business entrepreneurs.  
"You say government doesn’t support local investors. That’s rubbish! We have 450 companies in Namanve. 315 of them are Ugandan; that’s about 70 percent,” he said. 

Last month, traders went on strike protesting a range of issues, including the implementation of Efris, its enforcement and penalties of defaulters, high taxes on imported garments, bank agency notices issued by URA on traders’ accounts and corruption among tax enforcement personnel.
Traders alleged that Efris is complex and needs the employment of workers with IT and accounting skills to operate it yet the majority of the people in the wholesale trade attained minimal levels of formal education. 

This prompted President Museveni to meet them and halted penalising Efris defaulters as he consulted several ministries about the issues traders raised. 
According to the law, dodging taxes by manipulation of Efris attracts a Shs6m penalty.