Ugandan traders plead for tax relief

Tuesday August 24 2021
Uganda’s formal sector

Over 60,000 workers in Uganda’s formal sector lost their jobs and the workforce reduced to 653,066 as of June 30. PHOTO | FILE


Uganda’s business community wants the government to reduce taxes on raw materials and harmonise digital tax stamp rates with its East African Community partners Kenya, Tanzania and Rwanda.

Already, 60,982 workers in the formal sector lost their jobs by June 30, mirroring the significant uncertainty around the country’s economic outlook. A total of 714,048 Ugandans had formal jobs at the end of May, but with the second Covid-19 lockdown, the formal sector workforce reduced to 653,066 in June 30, Uganda’s Ministry of Finance data shows.

Daniel Musiitwa Ssubi, the chairman of the Federation of Small and Medium Enterprises Uganda said SMEs have taken the biggest hit from Covid-19.

“The quarantine and lockdown measures imposed by the government in March 18, 2020 and June 18, 2021, led to a decrease in demand and caused supply chain disruptions, raw material shortages, transportation challenges and cash flow disruptions,” said Mr Ssubi.

The central bank projects that the Ugandan economy will have a sluggish in growth. In an August 12 Monetary Policy Statement, the Bank of Uganda Governor Tumusiime-Mutebile projects the economy to grow 3.5 percent to four percent in the 2021/2022 financial year as a result of the effects of the measures taken to control the spread of Covid-19, which have affected the economy.

The private business owners are asking the government to consider revising its revenue ambitions and policies to improve the competitiveness of Ugandan goods in the region. In particular, they want Uganda to harmonise the Digital Tax Stamp rates with Kenya and Tanzania.