The Kampala Rice Traders Association is on the verge of taking legal action against the Uganda Revenue Authority (URA) due to a growing dispute over the imposition of an 18% tax on rice imported from Tanzania. This contentious move has raised concerns among traders and consumers, igniting a fervent debate surrounding the legality and economic repercussions of this taxation.

Challenging the taxation

The association’s secretary, Robert Ssentongo, has announced their intention to challenge the tax and seek compensation for rice that was impounded by the URA for two weeks. Traders argue that the 18% tax is not explicitly provided for in the East African Community Treaty, raising doubts about its legality.

Consumer Impact

In addition to their legal threats, the traders are highlighting the potential consequences for consumers. The proposed import duty and a 75% Value Added Tax (VAT) could result in significantly higher prices for rice, which could place a burden on the average consumer.

Call for Collaboration

In light of these issues, the traders are calling upon the URA to collaborate with them to find a resolution rather than resorting to heavy taxation and threats. They emphasize the importance of working together to address the pending challenges in the rice importation process.

Current Standoff

The controversy surrounding the 18% tax on Tanzanian rice imports has escalated to a legal standoff between traders and the Uganda Revenue Authority. The implications of this taxation on both traders and consumers have prompted a vigorous debate, prompting calls for a more collaborative approach to address the issue.

Businesses Paralyzed as URA Impounds Rice Trucks

Businesses at the Mutukula border in Kyotera District have been paralyzed since Tuesday, with over 100 trucks loaded with rice from neighboring Tanzania impounded by the Uganda Revenue Authority (URA). These trucks, intercepted at the Customs Office, have caused significant traffic jams, blocking other traders from conducting their usual business at the busy Uganda-Tanzania border point.

Traders’ concerns

Rice trader Patrick Ssenkima stated that “URA is currently using a wrong procedure to regulate rice imported from Tanzania.” He further explained that they had complied with URA’s directives to acquire import permits and have the rice checked by the Uganda National Bureau of Standards (UNBS). However, they are not satisfied with URA’s claims that their rice is from Pakistan, when they purchase it from Tanzania.

Financial impact on traders

Traders are facing substantial financial demands, with URA requesting UGX 69 million from Ssenkima as an import tax for each of his four trucks, totaling UGX 276 million. Aidah, a five-year rice trader, has been asked to pay UGX 86 million in taxes for 39 tonnes of rice intercepted at Mutukula border.

Concerns about expenses

Traders have expressed concerns about likely losses due to the expenses incurred while their trucks are delayed at the customs office. These expenses include truck hire costs, fuel, and driver allowances.

URA’s Response

URA spokesperson Ibrahim Bbosa confirmed awareness of the traders’ concerns at Mutukula border and stated that negotiations are underway to resolve the impasse. He expressed optimism that an agreement would be reached soon.

Customs Commissioner’s Caution

Earlier this week, the URA Commissioner of Customs, Abel Kagumire, cautioned rice traders against under-declaring their goods at the border points, with some businesspeople importing rice from countries like Pakistan but declaring it as Tanzanian.

Import Duty Taxation

It’s important to note that the importation of rice from outside the East African Community attracts a hefty import duty of 75%, whereas rice imported from EAC member states enjoys a 0% import duty tax.