Taxes still giving Traders in East Africa Sleepless Nights

The business community in the region want taxes and protectionist laws reviewed to make their products competitive.

The complaints emerged at the end of a manufacturers exhibition last week in Kampala, during which they lamented taxation regimes, which are making it harder to sustain businesses.

“Your tax collectors are prioritising collecting the last penny and sometimes beyond. When you tell them to broaden the tax base, they only understand registering more taxpayers, when you tell then to deepen the tax base, they understand charging more tax to the existing taxpayers; Excise duty here and there,” Deo Kayemba, the chairman of the Uganda Manufacturers Association (UMA) told an audience, among them told Prime Minister Robina Nabbanja, who represented President Yoweri Museveni at the closure of the week-long trade fair on Monday.

“None of the tax collectors thinks about the survival, sustainability and continued growth of the taxpayers and we think this is not helping the long-term growth of the economy,” Mr Kayemba said. Ms Nabbanja promised to address the concerns of the business community. But the complaints over tax are just among several issues that continue to plague the wider East African Community, 12 years after the Common Market Protocol was mooted to establish easier movement of goods, persons, labour, services and capital.

Domestic market protectionism also featured among the complaints. For example, UMA accuses Kenya, Tanzania and Rwanda of protectionist practices. Yet, Kenyan officials also level the same accusations against Uganda, accusing Kampala of violating the Customs Union with irregular taxes on Kenyan manufactured juice and pharmaceutical products. In the past, Uganda had passed a controversial law requiring that fruit and vegetable juices (except juice made from at least 30 percent pulp from fruit and vegetables grown in Uganda) attract 12 percent tax or Ush250 ($0.06) per litre.

For UMA, they complained of a stifling taxation regime may have a basis. Juliet Najjinda, a senior tax manager at PwC Uganda, says manufacturing sector remains one of the largest contributors to Uganda’s tax revenue. According to Uganda Revenues Authority annual performance report for t2020/2021, 71 percent of the tax revenue was collected from wholesale and retail trade, manufacturing, information and communication technology as well as financial and insurance services.

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