Ian M. Rumanyika, the Ag. Assistant Commissioner, Public and Corporate Affairs at URA
Uganda Revenue Authority (URA) has informed the General Public that through a ministerial directive ref TPD.81/167/04 dated 4th August 2021, textiles and garments which are not manufactured in Uganda and as such cannot be adequately sourced locally have been maintained at an import duty rate of 35%.
According to Ian M. Rumanyika, the Ag. Assistant Commissioner, Public and Corporate Affairs at URA, these textiles account for 90% of the clearances by the textile and garments traders.
However, Rumanyika adds, the textiles and garments that can be sourced locally from Ugandan manufacturers which account for 10% of the imports by the tradersshall be maintained at the rate of 35% or $3.0 per kilogram for textiles or 35% or USD 3.5 per kilogram for garments as approved by the council of Ministers under the East African Community Gazette Legal Notice No. EAC/118 /2021 dated 30th June 2021.
How many containers are pending clearance in Customs?
The Saturday Vision on 28/08/2021 reported that 700 containers of textile/garments are stuck at URA, quoting the Spokesperson of KACITA.
However, Rumanyika says, the figure is far from the truth.
“We are in possession of 125 containers and so far, 9 have been cleared due to the new tax regime as pronounced by the Honorable Minister of Finance Planning and Economic Development,” Rumanyika reveals.
Has the tax increased by 2000% as indicated by the spokesperson of KACITA?
Honorable Minister of Finance Planning and Economic Development has waived the specific duty rate of USD 3/3.5 per kg for the 90% of the textile and garments products, therefore these will remain at the 35% rate and as such, there is no increment of the taxes, Rumanyika says.
“The 35% was the tax rate applicable on textile for the Financial Year 2020/2021 and therefore status quo has been maintained,” he reveals.
Asked whether textile importers complied with the new Ministerial guide line, Rumanyika revealed: “Yes, indeed. From the 18th of August 2021 to date, 9 of 125 containers have been cleared out of customs after the implementation of the Ministerial directive that removed the specific duty rate on 90% of the textiles and garments.
This number is expected to grow as more traders realize that the rate has been maintained as it was last financial year.“
What therefore is the policy intention of the measures on the targeted 10% of the affected textile and garments?
- Import substitution – the products in question are produced in sufficient quantities in Uganda and will help boost manufacturing of the same in the country.
- Export Promotion: – Uganda shall be able to promote the cotton textile value chain from cotton growing to the manufacture of fabrics that will be exported after value has been added.
- Job Creation: Textiles have proved to be one of the most critical sectors in job creation in Africa. An example is Ethiopia, where the sector employs more than 2.5 Millionpeople, with women accounting for 70 per cent.
“We wish to inform the public that the Government of Uganda is continuing to engage the leadership of Kampala City Traders association (KACITA) and all the other Traders’ Associations to achieve a shared appreciation of this position and the collective benefits that come with it,” Rumanyika says, adding: “We also urge the public to always share feedback with us on how we can further improve our service offering.”