How permit vendors took over rice business

Rice in a shop. PHOTO/FILE

What you need to know:

  • Through a petition to Parliament, traders say they have been unfairly edged out of businesses by highly connected individuals.

Members of Kampala Rice Traders Association have accused the State minister of Trade and Cooperatives, Ms Harriet Ntabazi, and Uganda Revenue Authority (URA) officials of colluding to edge them out of business after rice import permits were revoked.

While appearing before the Parliamentary Committee on Trade, Tourism and Industry, which is investigating the trade war at the Uganda-Tanzania border at Mutukula, members, said they have been unfairly treated and forced out of business.

Trouble intensified when Ms Ntabazi on April 21 wrote to the commissioner of Customs at the URA, asking the authority to recall V.A.T exempt import permits, while allowing only the 15 companies that had dragged URA to court to allow importing tax free.

Suing URA

The 15 companies in July 2014 sued the URA Commissioner General seeking to stop the 18 percent VAT levy. They lost the case, but appealed to the higher court and were granted a temporary injunction, which has lasted for eight years now.

“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,” part of the April letter reads.

Some of the companies include Akhcom Ltd, Armour Trading Company Ltd, S.W.T Tanners Ltd, Ssunad Ltd, Gloree International Ltd and General Agencies Ltd.

Through a petition to Parliament, traders say they have been unfairly edged out of businesses by highly connected individuals who were presented with a VAT free permit to import rice while the rest have been forced to pay the tax.

Mr Livingstone Ssenyonga, the chairperson and the director of Kampala Rice Traders Association, says the decision is unfair. He said as a result of the above action, traders continue to suffer considerable losses arising from cargo carriage charges.

“In the circumstances, it is unfair and inequitable for the office of the State minister for Trade, Industry & Cooperatives, to now turn around and direct URA to recall the issued (and still operational) VAT exemption licences after the traders have already expended money towards the rice importation consignments based on the already issued VAT exemptions without affording the affected rice traders a chance to be heard,” he said.

According to Ssenyonga, while Ms Ntabazi intimated that the move to recall the issued V.A.T exemption rice importation permits was aimed at boosting local production, there are no domestic stocks in existence.

“I believe that the URA directive halting the clearance of V.A.T exempt rice imports other than the 15 importers operating under the Court Order was erroneously issued since it appears to favor only the said 15 importers who sued URA,” Mr Ssenyonga said.

Brokers take advantage

Mr Jimmy Muhumuza, the speaker of the association, while presenting their position said out of the 15 companies, only five are active in rice importation business while the rest have become brokers.

“We have only see five companies, but the rest have all collapsed. They now use their permits to act as brokers for other traders and since we want to do the business, we have no options, but to pay them,” he said.

Mr Mwine Mpaka, the committee chairperson, said they will summon the ministers, officials from URA and other stakeholders to appear before the committee to answer for the anomalies.