Covid-19 – Impact on trade and tax
rade and tax are bedrocks of Uganda’s economy. The panelists at Advocate Bernard Oundo’s virtual session held Monday to discuss how the pandemic has impacted trade and tax thought as much.
The session, broadcast via Facebook live featured the Commisioner of Domestic Taxes at Uganda Revenue Authority, Mr. Dickson Kateshumbwa, the Chairman of Kampala City Traders Association, Mr. Everest Kayondo among other ex
Mr. Kayondo’s submission started with an interesting observation. He opines that trade did not suffer the first pinch of this pandemic period. To Mr. Kayondo, it is tourism that felt the first pinch because of the closure of airports and land borders.
On the trade spectrum, his analysis was shocking yet telling of the times. “When COVID-19 was announced, people who were supposed to source goods from China, which is one of our major sources couldn’t travel. That meant people who were supposed to source goods from February to May haven’t been buying the goods.
” That would mean dwindling revenue in terms of customs and dwindling stock on the shelves and low sales and even paying for rent, and bank obligations, that is, loan repayments would become a challenge.” He said.
One would think that essential companies were spared from this cruel fate, right? Well, according to Mr. Kayondo, the total lockdown gas bought everything to a halt.
“Even those companies which continued operating, that is, essential companies, couldn’t sell 100%. All this impacts on revenue collection.” He concluded.
Mr. Richard Mubiru, Board Member and Chairman, Economic Policy Committe at Uganda Manufacturers Association (UMA) revealed that the operations of UMA had scaled down to a rate of 70%.
“The movement of goods has been affected negatively. Even the logistical supplies that feed into manufacturing by way of input are distorted by COVID-19.” He said pointing out the distortion on the international scene.
“At the international regional level, we have had major distortions. Europe remains our major destination, especially for frozen fish. With the lockdown affecting the whole of Europe, that has been wiped out. The Middle East hasn’t been spared either”
However, Mr. Mubiru saw little positives breaking through amidst this predicament we find ourselves in. One of them is the G2G sugar deal with Tanzania which could come through. Another is the increase in demand for maize flour which has been translated to milling, while new products such as sanitizers have come on board.
‘Exports have dropped in the month of March alone by about 57%’ – Dickson Kateshumbwa, URA
The UMA board member put certain suggestions on the table such as government putting salary reviews on hold for the moment and looking at getting into new export deals.
The Uganda Revenue Authority representative, Mr. Dickson Kateshumbwa was just as vocal on the drop in revenue from exports.
“Exports have dropped in the month of March alone by about 57%.” He outlined the measures URA has implemented to deal with the situation such as streamlining the refunds process and being flexible to allow warehousing of many products. He also intimated that URA was “open to discussions” for companies facing challenges in tax payment.
Mr. Cephas Birungi, Chairman Revenue Law and Taxation cluster at Uganda Law Society stated that he was concerned about agency notices which were still being served yet, ideally, such actions should wait until everything normalizes.
Ms. Joanita Nakimuli, Director Governance, Risk and Compliance at Trademark East Africa on her part discussed the commonality in initiatives taken in different countries such as extension of filing deadlines, expediting of VAT returns and suspension of tax returns.
“Moving forward, we are going to see prioritization of sectors like pharmaceuticals and agro-processing.” She said.
Mr. Moses Kaggwa, the Director Economic Affairs at Uganda’s Ministry of Finance expressed concerns about practice directions by URA not being followed by statutory instruments.
“They should be backed by legal authority very soon.”
He also discussed Small and Medium-size Enterprises and how they are looking for ways to help them. Interestingly, he opined that the focus should be on artificial intelligence, import replacement and export promotion.
However, in light of COVID-19, he emphasized the need to look into taxes like OTT. He noted that in order to balance the situation, “there could be deferral for payments for sometime but in general terms of a general overhaul of taxes, not yet.”
( With Assistance By Owach Rita)