Small scale traders at the border points of Busia and Malaba will start paying taxes for their goods after years of engaging in informal trade, Uganda Revenue Authority (URA) has announced.
As an incentive to encourage these traders to contribute to the country’s treasury, URA has agreed to offer a 30 per cent tax relief on goods that the small traders would be importing into the country. For instance, if a trader is importing 10 cartons of wheat, they will be required to pay taxes for only seven.
This development was announced after URA enforcement officials carried out a swoop three weeks ago and impounded goods worth millions of shillings being smuggled in small quantities. Trucks, commuter taxis and motorcycles transporting the merchandise were also impounded.
James Kisaale, URA’s assistant commissioner in charge of enforcement, told journalists that tax evasion by small traders had increased and that the tax body was losing too much money.
“If you go to shops in Busia, Tororo, Sironko, Mbale and Iganga, the wheat on the shelves is from Kenya; that is why factory-owners wrote to the ministry of Trade complaining that smuggling was driving them out of business,” he said.
Kisaale said that in just three weeks, they had been able to impound goods worth Shs 100m from traders plying between Iganga, Jinja, Budaka, Tororo, Busia and Mbale.
Many traders believe goods in small quantities do not need to be taxed. He said last year alone, URA impounded six 6ft containers of wheat. When the taxes and penalties were paid, URA recovered Shs 400m. He was recently speaking to journalists in Busia.
Jamawa Kadondi, a small-scale trader, has been doing her business for the last 15 years at the border town of Busia. She buys a few cartons of wheat flour from the Kenyan side of Busia and transports it to towns such as Iganga and Tororo for sale.
She said: “Business has been good, we used to load one or two cartons onto commuter vans or lorries going back to Kampala, which would drop the commodities in Iganga without paying much in transportation cost.”
Another trader, Susan Tibiri, said for the last eight years, she has traded in flour in small quantities because she thought URA did not tax that. Kisaale told the traders that when added up, these small quantities accounted for huge amounts of unpaid tax. For instance, he gave an example of disabled men who used their wheelchairs as a means of transporting the cartons across the Uganda-Kenya border.
“Imagine one used the wheelchair and transported 10 cartons a day; in a month that will be 300 cartons and in a year 3,600 cartons, which is equivalent to almost four containers. That is a lot of money lost if the goods were not taxed,” he said.
Kisaale said a market desk would help those that bring small quantities of goods to pay taxes and desist from smuggling.