Traders’ concerns are more than lengthy speeches

 Key among the concerns are the tax rates. Uganda’s tax rates are not competitive at all, especially the corporate rate. 30 percent of companies’ chargeable income is taxed. This means, for example, that if a company has Shs100 million in chargeable income, URA takes Shs30 million that financial year. Let’s assume that the company’s profitability is steady for the next two financial years, which would mean that by the third year, URA would have taken 90 percent of the income from the first year. This means literally that in every three financial years, a company spends 90 percent of its income on tax. How do you expect growth? How do you expect expansion and job creation?

On top of that 30 percent, the shareholders remit 15 percent each in withholding tax. How will a foreign shareholder have the appetite to invest here? No amount of free land and road construction will ever substitute an investor’s fear for high tax rates.

 Any serious investor will consider our tax rates first before investing here. Our VAT rate is 18 percent, that is not so bad, but as a landlocked country trying to compete with neighbours who have access to the sea and with better infrastructure, you need to re-visit that rate to attract investors.

When it comes to tax at importation, the argument from the government has always been that there is a need to protect local production. That is really true as it’s one of the major purposes for import tariffs. Unfortunately, the local production we claim to protect is almost non-existent. We can only point to a few factories that can’t even produce enough for a sub-county. It would also be self-defeating to protect these industries from foreign competition only to watch them die due to high tax rates,

 When it comes to the high handedness of the URA, traders are only saying that these officers in exercise of their mandate trample on several of other rights like the right to property when they impound goods without reasonable cause, when they extort money from traders in exchange for their commercial freedom, the right to freedom from inhuman and degrading treatment when conducting arrests.

 Of course, taxes are not voluntary and the duty to pay the same is not negotiable. In fact, taxes are enforced not lobbied for. But be that as it may, the tax body needs to understand that they are not operating in a vacuum. They need to wear a human face even during enforcement, should respect the law, human rights and not exceed their powers.

 As an addition to that, the government must introduce an initiative geared towards tax education. The URA has tried on this end, but its efforts are not sufficient. They need to be beefed up by say, introducing tax education units at local council level. Tax sensitisation is an invitation to tax compliance and therefore, improved revenue collection.

The other concern rotates around value for money. In one of the tax sessions I had with a Rotaract club full of youthful traders, I strained to explain to them that when it comes to misuse of tax, URA is innocent since its duty is to collect and remit but it does not  allocate these monies.

The young traders didn’t buy this argument. They argued that it’s one government. Therefore, the government as a whole should ensure value for tax money. It is hard to enforce compliance when there are several pot-holed and impassable roads in Kampala and elsewhere and yet, the political class is spending lavishly and when hospitals are under equipped.

We should not dismiss the traders’  concerns as doing so would tantamount to shooting ourselves directly in the foot or at worst, in the head.

Patrick Kato Ntale is a tax advisor at

Avrax advocates.