The Forum for Democratic Change (FDC) party Najjanankumbi faction has joined forces with traders and businessmen saying that Uganda Revenue Authority’s (URA) Electronic Fiscal Receipting and Invoicing system (EFRIS) was hurriedly enforced without stakeholder’s sensitization.
While addressing the media at their party headquarters at Najjanankumbi on Monday, FDC party president Patrick Amuriat revealed that the lack of requisite infrastructure to use the system meant that traders were not fully aware of its significance, the specific businesses required to enroll, the variety of taxes due, and the potential opportunities that lied ahead.
Amuriat added in turn this has led to traders’ frustration with the EFRIS system, greatly affecting their businesses. We have established that EFRIS exposes traders to a heavier tax burden, including previously hidden taxes like withholding tax, income tax, and VAT.
“The FDC stands with Uganda’s traders and businessmen in protesting the enforcement of the URA’s EFRIS system. We believe that it was hurriedly enforced without sensitizing stakeholders, such that they appreciate it,”he said.
According to FDC’s party president, majority of businesses operating in Uganda remain under informal arrangements and that the financial burdens imposed by EFRIS on small businesses only serve to kill these enterprises.
Clear records, he said showed that over 200,000 people were closing their businesses due to EFRIS, resulting in a shortfall in tax collection every day in addition to the unforgiving enforcement tactics and penalties for non-compliance.
He said, “In fact, the URA’s enforcement tactics and steep penalties for non-compliance hinder widespread adoption of the system. URA’s current enforcement approach, as well as the high penalties of Shs 6 million per receipt (for failure to use the system), greatly discourage the adoption of the technology.”
URA developed the EFRIS for e-Invoicing and VAT reporting of commercial transactions as per Sections 73A and 73B of the Tax Procedures Code Act 2014, supporting the implementation of EFRIS and launched January 2021.
By this all, companies registered in Uganda were directed to use the EFRIS platform to report electronically issued invoices and cash receipts to the URA submitting their electronic sales invoices to the URA, wait for approval of the invoice to make any transmit to their client aiming at tackling tax evasion and the fraudulent practice of false invoices for fake purchases.
Traders and the entire business community however, have since expressed their concerns about the system calling for a standoff as well as seeking audience from different authorities including a meeting held with the leader of opposition last week, the minister for Kampala and in future hoping to have one with the president for an ever lasting political solution however not limited to the tax system alone but the many challenges which they say have hindered their progress and thus look for underlying solutions as they continue with their protest.
The FDC also acknowledged the depth of the treaders and business community grievances fueling the protests beyond the initial discontent with EFRIS and that their protests in the form of sit-down strikes and lockdowns, ongoing to put pressure on the Government to address the traders’ plight.
The plight includes amongothers; the current 18% VAT rate, imposed on each trader as goods move to the next trader or business, amounts to double taxation and limits competitiveness in the region, especially compared to Kenya, whose VAT is at 16%.
Additional grievances include elevated import duty rates on textiles and garments, with import duty standing at 3.0 and 3.5 USD per kilogram, respectively, increasing the cost of doing business and encouraging smuggling, resulting in numerous uncleared containers at URA facilities which FDC said needed a reduction back to 25%.
Amidst these economic pressures, FDC said that local traders shouldn’t be subjected to non-standardized URA valuation guidelines for imported and exported goods, hindering effective business planning and placing traders at a disadvantage compared to their regional counterparts.
“Further compounding the issue is the alleged unprofessional conduct of the taxman’s enforcement officers and the high interest rates imposed on local businesses, ranging from 17-36%, contrasting sharply with the more favourable conditions afforded to foreign competitors, particularly Chinese firms, who benefit from lower credit rates and additional business incentives,” they added.
FDC thus urged the Government and URA to engage stakeholders so that the plight of the traders and businessmen is attended to, acknowledging also the increased tax base despite elaborate and harsh tax enforcement mechanism exhibited but also characterised with government indiscipline in borrowing saying the country cannot service such loans with the wastage of taxpayers’ money and that if the money collected from Ugandans was put to better use, Uganda would be a better country to live in.
