MPs Start Probe into Traders Petition Over Unfair Taxation on Rice Imports

Members of Parliament on the committee on Tourism, Trade, and Industries have commenced inquiries into the petition of Kampala Rice Traders' Association over the unfair Value Added Tax – VAT exempt rice importation.

Last week, the traders, who import rice from Tanzania petitioned Speaker Anita Among Annet, seeking Parliament to prevail over the discriminative, and reinstatement of the 18 percent VAT levy.

Led by their Chairperson, Livingstone Ssenyonga, the petitioners said they have encountered several trading obstacles, compounded by the interruptive communication from the Ministry of Trade, Industry, and Cooperatives denouncing clearance VAT exempt rice imports until further notice.

While meeting the committee on Monday, Ssenyonga, pointed out that communication consequently led to several of the traders’ trucks with recalled tax-exempt permits queueing uncleared at the Mutukula border, resulting in losses arising from cargo carriage charges.

The traders pay to Uganda Revenue Authority-URA at Uganda – Tanzania Mutukula border up to 220,000 Shillings for every 1,000 metric tonnes of rice imported from Tanzania, through over 3,000 kilometers distance by road.

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The directive by Harriet Ntabazi, the State Minister of Trade addressed to the Commissioner, Customs at the Uganda Revenue Authority- URA was contained in a letter dated 21 April 2022.

“This is, therefore, to guide that you cease clearance of VAT exempt rice imports until further notice excluding 15 companies operating under a court order,” reads part of the letter.

Ntabazi, says the country imported 41,000 metric tons of rice beyond the national deficit between January to April this year, thus calling for immediate remedial interventions to protect the domestic rice sector.

The demand for rice in Uganda, according to Isaac Kashaija, the Chairman Rice Business Sector Association - RBSA, currently stands at around 380,000 metric tons per month, with total local production of approximately 180,000 metric tons per season leaving a deficit of about 200,000 metric tons per month. 

Mwine Mpaka, the Mbarara City South MP and Committee Chairperson says that they have two weeks to conclude their investigations into the grievances raised by the petitioners as directed by the Speaker.

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Last week, the affected rice traders paused importations from Tanzania in protest over the reinstatement of the levy as no single rice truck of rice has been cleared to enter the country, prompting a kilogram of rice to 4,000 from 3,500 shillings. 

In July 2014, a group of 15 rice importing companies sued the URA Commissioner General seeking to stop the 18 percent VAT levy. They include; Akhcom Limited, Armour Trading company Ltd, S.W.T Tanners Ltd, Ssunad Ltd, Gloree International Ltd, and General Agencies Ltd.

The rice companies challenged URA in court, for charging them a tax on rice imports, despite the EAC protocol barring such taxation. The East African Customs Union Protocol Article 15 prohibits partner states from imposing duties on products originating from partner states.

However, the Companies lost the petition in the Commercial Court and appealed the decision in the High court, which granted them a temporal injunction stopping the implementation of the directive.