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Why Kampala shops are shut: Revisiting city traders’ grievances
Businesses are seen closed on July 31, 2024 during the traders' strike in Kampala. PHOTO/MICHAEL KAKUMIRIZI
What you need to know:
- The influx of foreign investors, mostly Chinese, operating petty businesses downtown is also another issue traders want addressed immediately.
Anytime a Value Added Tax (VAT)-registered trader issues an electronic invoice or receipt (e-Invoice or e-Receipt), the Uganda Revenue Authority (URA) is notified and automatically calculates the taxes.
This real-time monitoring of all VAT-registered businesses transactions by the taxman through its Electronic Fiscal Receipting and Invoicing Solution (EFRIS), forms the biggest grievance city traders have cried of since April when they started their first peaceful strike.
According to URA’s official website, EFRIS entails the use of Electronic Fiscal Devices (EFDs), e-Invoicing, or direct communication with business transaction systems to manage the issuance of e-receipts and e-invoices in accordance with the Tax Procedures Code Act 2014.
Kampala traders are seen standing next to their closed businesses at the resumption of their shop shutdown strike in Kampala on July 31, 2024. Traders seek a meeting with President Museveni to address their long-held grievances relating to tax. PHOTO/ISAAC KASAMANI
The abrupt cancellation of the meeting between President Museveni and the traders, scheduled for yesterday for the former to inform the latter about the government’s final stance on the EFRIS implementation, sparked another strike among traders, which started yesterday.
Mr Museveni, on April 19, met the leadership of the traders, who had locked their shops for almost a week over several grievances led by the EFRIS issue. A general meeting with all traders was held on May 7, where the President passed some directives, including stopping the compulsory purchase of the EFIRS machines by traders, among others.
Mr Museveni also directed the URA to stop fining traders over failure to implement the EFRIS, and forgive those who had been fined due to failure to implement EFRIS, and also open shops that had been closed due to the same, which the taxman later implemented.
Traders argue that EFRIS should be suspended because it contradicts the privatization policy as it gives government 90 percent of powers to control traders’ sweat and businesses, making it rough to the traders, forcing some of them to unceremoniously quit, leading to high unemployment rates.
Police officers patrol Kampala on July 31, 2024 during a shop shut down strike by city traders. PHOTO/MICHEAL KAKUMIRIZI
Apart from EFRIS, the traders are also aggrieved with the taxes and their computations. VAT, Import Duty, VAT on importation, Infrastructural Levy, Environmental Levy, Withholding Tax and VAT after sale are some of the taxes importers of second-hand clothes or shoes have to pay to complete a single transaction.
They say every importer or manufacturer adds the 18 percent VAT on the products, which they remit to URA. The chain continues as the wholesaler, who buys the products, also adds the cost net of VAT, a profit margin and 18 percent VAT.
At first, the President had agreed with them that VAT should be charged once but after meeting with technocrats, he, during the Kololo meeting, said the collection method will jeopardise the tax collections.
Officials from the URA have on several occasions maintained that VAT is paid by the last consumer and the traders are just collecting it on behalf of URA and later remit it, which some do not want to remit, explaining the resistance on EFRIS, which monitors real-time transactions.
Kampala traders are seen standing next to their closed businesses at the resumption of their shop shutdown strike in Kampala on July 31, 2024. PHOTO/ISAAC KASAMANI
Traders also want Mr Museveni to order the immediate suspension of $3 (Shs11,100) and $3.5 (about Shs13,000) per kilogramme tax on fabrics and garments respectively. This, they say, has increased smuggling of the same items from the neighbouring countries, as well as increasing the number of abandoned and uncleared containers at URA.
Trade chain violation
The influx of Chinese investors operating shops downtown is also another issue traders want addressed immediately. This, the traders say, has led to unhealthy competition with the local players through distribution, wholesale, as well as retail shops, in addition to hawking even in upcountry areas.
Other grievances of the traders are empowering local manufacturers to enable them supply enough and quality products, especially in textiles before limiting importation; traders want to be given a seat in Parliament so that they choose their representative(s) who will front their issues; review of ledgers and reverse the penalties and fines assessed on traders, and well as re-evaluate traders who were enrolled on VAT illegally; revision of high interest rate (18-36 percent) that makes the cost of business financing unfavourable; and inadequate business support, especially to small and medium enterprises (SMEs).
Trend
• The Electronic Fiscal Receipting and Invoicing Solution (EFRIS) implemented by URA.
• Demand for revision of the VAT threshold from the current annual Shs150m upwards.
• Taxes
• Investors engaging in retail trade.
• Empowering local manufacturers to enable them supply enough and quality products, especially in textiles before limiting importation.
• Traders want to be given a seat in Parliament so that they choose their representative(s) who will front their issues.
• Review of ledgers and reverse the penalties and fines assessed on traders, as well as re-evaluate traders who were enrolled on VAT illegally.
• Revision of high interest rate (18-36 percent) that makes the cost of business financing unfavourable; and inadequate business support, especially to small and medium enterprises (SMEs).
