Kenyan trucks with tonnes of potatoes stuck at border after Uganda raises levy

Thursday April 18 2024

Trucks parked at the Busia-Kenya Busia border following the introduction of a new withholding tax by Uganda Revenue Authority (URA). PHOTO | DAILY MONITOR | NMG


Close to 30 trucks from Kenya loaded with tonnes of Irish potatoes are stuck at the Busia border after the Uganda Revenue Authority (URA) increased the withholding tax by up to 10 times.

Another 20 trucks were reportedly impounded by the tax agency in Jinja, about 120km from the Busia border, on April 12 when the new withholding tax policy was implemented.

According to importers of Irish potatoes from Kenya, they have been paying a withholding tax of Ush120,000 (about $32) for each truck. Now, URA, they say, requires them to pay Ush1,200,000 ($315) for each truck.

Ibrahim Bbosa, the URA Commissioner Public and Corporate Affairs said the tax agency had increased the withholding tax of six percent with a customs value of $0.4 (Ush1,560) on each kilogramme of Irish potatoes imported into the country. This increases the tax from Ush9 ($0.0024) to Ush93.6 ($0.025) per kilo.

Read: Uganda proposes new taxes on key products

According to Mr Bbosa, the product has previously been “undervalued”, the reason the tax body was reviewing it.


“We have reviewed and increased withholding tax on Irish potatoes coming into the country, but not to the value the importers are talking about,” he said.

He noted that there was confusion about the rates the importers were using.

Agents' fears

Haji Ali Mande, the chairman Uganda Clearing Agents and Forwarding Association Jinja branch, said the implementation of the tax that started on April 12 was “hurriedly done” and “too high” for the importers.

“Whereas URA was saying it had increased the tax from Ush9 to Ush93.6 per kilogramme of Irish potatoes imported into the country, the trucks that were impounded in Jinja had paid Ush1,560 on each kilogramme,” he said.

“We just heard that 15 trucks carrying Irish potatoes from Kenya had been impounded by URA, only to be told that they had to pay a new levy of Ush1,560 on each kilogramme instead of the old levy of $0.058 (Ush220),” he added.

Mr Mande now fears that Kenya could retaliate and impose a blockade on Ugandan goods as has happened in the past.

Kenya, which is Uganda’s leading trading partner has in the recent past imposed bans on Ugandan goods, including sugar, sugarcane, maize, milk and eggs.

Read: Uganda’s dairy sector counting losses as Kenya blocks exports

Mr Yahaya Kamba, a clearing agent who clears Irish potatoes at the Busia border, said because of the policy, URA impounded 15 trucks in Jinja, and a notice was sent to Eldoret, Nakuru and Kisumu, all in Kenya, instructing against dispatching trucks that have not paid the new tax.

Another agent at the border, Paul Chuka, said the increment in tax makes it very expensive for importers.

“When you compute the withholding tax with the Ush1,560 that URA is implementing, it pushes the importers into costs, requiring one to pay $200 fees (Ush800,000) to Uganda National Bureau of Standards, which is unaffordable,” he said.

Traders loss

Samuel Jumba, an importer of Irish potatoes based in Kisenyi, Kampala, said traders are counting losses after the products perished following their impounding by the tax body.

Mariam Milly Namwasa, another importer based in Mbale City, said the new tax was increasing the cost of doing business.

She said she buys one kilogramme of Irish potatoes at Ksh30 (about Ush900, $0.24). Since she incurs transport costs, she sells each kilogramme on the Ugandan market between Ush1,500 ($0.39) and Ush2,000 ($0.53). She says she fears that the new tax on each kilogramme would make it difficult for her to access the market.

Mr Juma Yahaya, the Secretary-General of Uganda Clearing and Forwarding Association -- Busia said the tax risked making the Irish potatoes “totally unaffordable” to Ugandans.

Read: Why Kenya closed porous Uganda border routes

“Importers are going to push the cost to the final consumer, meaning if a plate of Irish potato chips has been going for Ush3,000 ($0.79), we should expect to buy it at not less than Ush6,000 ($1.58),” he said.

Mr Pius Baleno, a truck driver, said even after two days, he was yet to have his goods cleared to proceed to Uganda because of the new tax policy.