1. UMA is an umbrella body of manufacturers in Uganda. And has been in existence since 1988. The manufacturing sector contributes 23% of tax revenue in Uganda and employs close to 2 million Ugandans. Manufacturers constitute market for 70 % of Uganda’s electricity output.

1. 19% of the total export from Uganda are of manufactured goods.

1. UMA has been following events surrounding the trade sector strike that is attributed to among others, the rollout of EFRIS by the Uganda Revenue Authority.

Arising from the above, the manufacturers would like to share their position on the above events as follows;

1. Electronic Fiscal Receipting and Invoicing System (EFRIS)

UMA supports the introduction of EFRIS as a tax collection solution 100%. Manufacturers have already embraced the system and it is working for us.

Advantages –

1. It widens the tax base

1. It formalizes the economy so that all players in the economy can contribute to their tax obligations on a leveled ground.

1. It digitizes the economy which is a critical factor in development.

1. The same system has been adopted regionally and works well; therefore, we cannot work in isolation.

It isn’t without a doubt that we have not faced challenges with the system. To combat these challenges, UMA has maintained a formal working relationship with the Uganda Revenue Authority and this has resolved issues related to EFRIS and we continue engaged for the outstanding issues. 

However, there are some challenges on the implementation side of it.

1. Challenge on sensitization, implementation and infrastructure: The improved tax collection recorded by URA prompted them to rapidly rollout to other players in the economy. This rapid move, without prior adequate sensitization and education on the use of the system has caused this impasse.

1. Investment in equipment prior to introduction of systems: Relatedly, before implementing systems such as DTS and EFRIS, the Government should invest in equipment to facilitate smooth implementation. This would address and reduce the burden of implementation cost on the tax payers.

1. Implementation penalty under EFRIS: there is high handedness on penalty yet the implementation still has some challenges that must be addressed on both sides (the tax payers and URA)

Irrespective of the value and turnover of the tax payer, each invoice attracts ugx 6million.

• VAT Threshold:  As per the Investment Code Act, USD 50,000 is required for a Ugandan investor to acquire an investment license. UMA proposes that the VAT threshold be matched to acquisition of investment threshold for Ugandans.

• Import Duty on fabrics and garments:

1. UMA does not agree on varying the specific duty rates applicable to some tariff lines of textile.

1. The textile sector has over 500 tariff lines of which only 47 attract specific duties. The specific duties were introduced after a consultative process based on available local and regional capacity. The rationale behind this is to enhance value addition on local cotton where only 10% is value added as of now.

1. Owing to this policy position, investments have been attracted into the textile sector which should not be disrupted by policy reversal.

• Non-standardized valuation guideline for goods:

1. We agree that there is some improvement that needed to be done by the Uganda Revenue Authority.

1. There are various valuation methods used for customs valuation by URA. UMA proposes that while URA can use the various valuation methods, the resultant tax effect should be the same.  

1. For transparency and certainty, customs values on the basis of the basis which tax is computed should be standardized for a period of at least 90 days and be published widely for information to the trade sector.

• Anti-competition practices by manufacturers:

We appreciate Government’s commitment to streamlining competition in Uganda through passing the Competition Law. 

We agree that there is a problem when manufacturers start doing last mile deliveries because they displace the SMEs and the traders. Through the competition law, we propose that;

1. In the interim, Government of Uganda through Ministry of Trade Industry and Cooperatives (MTIC) should fast-track the development of guidelines to regulate the market.  

1. In the medium term, UMA proposes that going forward, the law should be revised to create a Competition Commission to handle trade regulation (Kenya has done the same).

• Loss of Uganda’s competitiveness as a trade hub for the region.

UMA agrees that Uganda is losing its traditional export business to neighbouring countries. UMA has observed that our regional partners under the EAC are using the stays of application window to run away from the agreed CET rates under the customs union. In doing so, they end up undermining Uganda which religiously observes the agreed CET positions.

This must be addressed in the council of Ministers and the EAC summit for Heads of state.

In conclusion;

1. UMA strongly believes in engagement and therefore these matters can be resolved expeditious through open dialogue with the relevant stakeholders.

1. The trade sector should be given a moratorium up to 30^th June 2024 to allow them run down their stock that may have come in without complying with the new EFRIS.

1. Ministry of Finance, Planning and Economic Development should drop EFRIS related penalties that were issued against all traders and manufacturers. This will enable the trade and manufacturing sector to start from a new page in the financial year, 2024/25.

1. During the ongoing consideration of tax bills by Parliament for the Financial year 2024/25, penalties associated with the implementation of EFRIS should be based on the invoice value and we propose a penalty of 1% of invoice value to drive compliance.