The commerce committee is looking at a petition from rice traders who are pleading with Parliament to intervene in a resolution to stop importing grains without paying VAT (VAT). (Rice traders are enraged by a tax hike at the Mutukula border)
This comes after Deputy Speaker Thomas Tayebwa directed the Ministry of Trade, Industry and Cooperatives to issue a letter to rice traders allowing them to import rice without difficulty over the Mutukula border.
Tayebwa stated rice traders petitioned him about the Rice Agribusiness Development Foundation (RADFO), a company that was given autonomous rights to import rice via Mutukula, which they alleged was frustrating commerce, during a House session on Thursday, May 5, 2022
On Monday, May 16, 2022, RADFO, along with Kampala Rice Traders Association, Rice Millers Council of Uganda, and Rice Business Sector Association, gave presentations before the trade committee.
According to Livingstone Ssenyonga of the Kampala Rice Traders Group, numerous enterprises who are members of the association have been granted permission to import tax-free rice from Tanzania.
He claimed it was unjust for the state minister for commerce, Hon. Harriet Ntabazi, to order the Uganda Revenue Authority (URA) to withdraw tax-free rice importation licenses that had already been issued and were in use by traders
“The URA directive blocking clearance of VAT exempt rice imports other than the 15 importers operating under the court order was issued incorrectly because it appeared to favor just the 15 importers who sued URA,” the petition states.
The traders complained in the appeal that, while the action was intended to stimulate local production, they were unaware of any existing domestic rice supplies in Uganda, and that traders had failed to purchase locally to alleviate domestic rice scarcity.
“Border officials have been demanding us to pay VAT on the rice we import from Tanzania, which has perplexed us. The trucks conveying the rice are charged exorbitantly, forcing them to wait at the border for long periods of time,” Ssenyonga explained.
“The longer our vehicles are kept at the border, the more expensive it becomes, and when you factor in the fee, they want us to pay, it becomes prohibitively expensive for us to break even in our operations,” he continued.
Ssenyonga went on to say that rice dealers were unaware of the minister’s decision to cease the importation of tax-free rice, and that just five of the 15 companies approved by the minister are currently active.
Some importers, he claimed, have resorted to using the five functioning businesses that are immune from paying import tax to bring in their rice consignments, but at a cost.
He pointed out that rice importers are required to pay Shs180,000 every ton of rice imported, excluding the tax that RADFO has been collecting.
Traders, on the other hand, have been paying Shs220,000 per ton to tax-exempted companies in order to enter the Mutukula border.
“RADCO began charging this money in January 2022, but halted near the end of March after we filed a petition with Parliament challenging them. Since the previous two days, we’ve been importing tax-free,” Ssenyonga explained.
The foundation was granted the power to function as an apex body to regulate enterprises importing rice into Uganda, according to Moses Ssekandi, the RADFO Secretary.
Rice Millers Council of Uganda filed a petition with the Ministry of East African Community Affairs, claiming that the inflow of rice imports from other nations was suffocating rice output.
“By March 2021, a kilogramme of Tanzanian rice cost Shs2,100 on the Ugandan market, compared to Shs2,800 for rice grown domestically.” Millers in Uganda were unable to sell their rice at a profit because of this, according to Ssekandi.
He also stated that imposing a tariff on rice imports aided in improving market pricing competition in favor of Ugandan rice growers and millers.
“RADFO began operations in January 2022, and by February, the price of locally produced rice had risen to Shs2,900, compared to Shs3,000 for rice imported from Tanzania,” Ssekandi explained
He explained that, as part of the government’s import substitution goal, RADFO carried out its mandate at the border by encouraging importers to invest in rice production in Uganda by collecting Shs180,000 every ton of rice imported.
He informed lawmakers that the funds would be used to help importers engage in rice cultivation in Uganda.
The Rice Millers Council of Uganda’s Phillip Idro emphasized the importance of limiting rice imports from other countries in order to offer Ugandan farmers and millers who add value to rice a competitive advantage in the market.
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“As farmers and millers who have invested, we want to see imports controlled so that local farmers may improve production and profit,” Idro added. (Rice traders are enraged by a tax hike at the Mutukula border – CELEBRITY JAZZ UG)