Kenya Irish potatoes stuck at Busia border over new Ugandan tax

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

What you need to know:

  • Hajj Mande now fears that since a new withholding tax was implemented on a Kenyan product, the neighbouring country may retaliate and impose a blockade on Uganda goods like it has done in the past.

Close to 30 trucks from Kenya loaded with tons of Irish potatoes destined for Uganda are stuck at the Busia border after Uganda Revenue Authority (URA) doubled withholding tax on products from the neighbouring country.
Other 20 trucks were reportedly impounded by the tax body in Jinja on April 12 when the new withholding tax policy, which pushed the levy to 100 percent, was implemented.
According to importers of the Irish potatoes from Kenya, they have been paying withholding tax of Shs120,000 for each truck, but in the new tax policy, URA seeks Shs1,200,000 from each truck, which the tax body has, however, denied.
Mr Ibrahim Bbosa, the URA Commissioner Public and Corporate affairs, said URA had increased withholding tax of 6 percent with a customs value of $0.4 (Shs1,560) on each kilogram of Irish potatoes imported into the country, which increases the tax from Shs9 to Shs93.6 on each kilogramme.
According to Mr Bbosa, the product has previously been “undervalued”, the reason the tax body was reviewing it by 100 percent.
“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 clarified.
He further explained that importers and clearing agents had been using a wrong value of $0.4 which is the custom’s value and directly computing it with the current exchange rate, which pushes the tax per kilogram of Irish potatoes to Shs1,560.
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 Shs9 to Shs93.6 per kilogramme of Irish potatoes imported into the country, the trucks that were impounded in Jinja had paid Shs1,560 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 Shs1,560 on each kilogramme instead of the old levy of $0.058 (Shs240),” he added.
Hajj Mande now fears that since a new withholding tax was implemented on a Kenyan product, the neighbouring country may retaliate and impose a blockade on Uganda goods like it has done in the past.
Kenya, which is Uganda’s leading trading partner has in the recent past imposed bans on Ugandan goods, including sugar, sugarcanes, maize, milk and eggs.
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, while a notice was sent to Eldoret, Nakuru and Kisumu, all in Kenya, instructing against dispatching trucks that have not paid the new tax.
Mr Paul Chuka, also a clearing agent at the Busia border, said the increment in tax makes it very expensive for importers.
“When you compute the withholding tax with the Shs1,560 that URA is implementing, it pushes the importers into costs, requiring one to pay $200 fees (Shs800,000) to Uganda National Bureau of Standards (Unbs), which is unaffordable to the importers,” he said.
Mr 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.
Ms Mariam Milly Namwasa, an importer who is based in Mbale City, said the new tax was increasing the cost of doing business.
She said she buys one kilogram of Irish potatoes at KShs30 (about Shs900), but has to incur transport costs and sells each kilogramme on the Ugandan market between Shs1,500 and Shs2,000, fearing that the Shs1,560 tax on each kilogramme would make it difficult for her to access market.
Mr Juma Yahaya, the Secretary General Uganda Clearing and Forwarding Association-Busia, said the tax risked making the Irish potatoes “totally unaffordable” to Ugandans.
“Importers are going to push the cost to the final consumer, meaning if a plate of Irish potato chips has been going for Shs3,000, we should expect to buy it at not less than Shs6,000,” 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.