Tax Rates Frustrate Ugandan Traders

Small business people in one of Kampala’s main trading hubs, Kiyembe, have asked Uganda Revenue Authority (URA) to change their taxation system, saying its unfair and leaves them paying more revenue than they are actually earning from their businesses.

Currently, a business owner with an annual turnover of between Ush20 million ($6,720) and Ush30 million ($10,080) has to pay Ush750,000 ($250) each year.

However those who make Ush30 million to Ush40 million ($13,440) have to pay Ush1,050,000 ($350) that is 3% of their income.

During a URA taxation overview visit to Kiyembe last week, traders asked Dorothy Akol, the URA Commissioner General to look into the issue.

“Imagine someone who is dealing in textiles has to pay the same taxes like someone dealing in electronics because you estimate they fall in the same taxation rates. That’s unfair to most traders especially small scale businesses.

“We prefer that each business or shop be taxed according to how much it is earning and not the status quo.That way we will not be making losses like we are doing now,” Simon Kazimbwe, a trader in textiles said.

He asked that URA djustments that will favor traders and ensure that businesses grow but not collapsing.

Akol said they were already looking into it and had made a proposal to the Ministry of Finance. She said if the proposal passes, individuals will determine which taxation system is favourable to them.

“We had received that complaint before and we already handed in our proposal. In this new proposal, we will have different taxation systems for different commodities and locations, or alternatively, traders will be asked to keep record books and the taxation rates will be according to the record books,” Akol said.

Among other issues raised were harassment from URA informers who cheat traders by asking them for extra money for clearing goods, network glitches during clearance which increases the amount of time spent at the border.

The General Secretary for Kampala City Traders Association (KACITA) Ephraim Sentamu said URA must educate more about the taxation system so that traders are not cheated by agents.

However, James Kisaale the URA Assistant Commissioner, Enforcement said the agents at different checkpoints are necessary because of high levels of smuggling and taxi invasion techniques which most traders use to avoid paying tax.

Source : East African Business Week

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