Rice growers in Uganda want urgent action taken on what they have termed as discriminative and unfair taxation of rice importers by the Uganda Revenue Authority (URA).
According to Isaac Kashaija, the chairperson Rice Business Sector Association Limited (RBSAL), out of the 73 rice companies in Uganda, 57 have been forced out of business due to unfavourable taxation.
He cited the VAT (Amendment) Act 2014 which provides for an application of 18 per cent value added tax on white milled rice imported, which he said selected companies had been exempted from.
Kashaija raised the concerns while leading a team of representatives of rice growing associations from across the country to petition Speaker Rebecca Kadaga on the unfair taxation that had put many small scale companies out of business.
He told the Speaker that SWT Tanners Limited and 13 other companies, in July 2014, sued the Commissioner General URA in the Commercial Court, to prevent URA from charging the 18 per cent tax.
“The Commercial Court ruled in favour of URA meaning the 14 companies lost the case. But the companies appealed to the Commercial Division of the High Court, and were granted a temporary injunction waiting implementation of the newly passed law,” Kashaija said.
He added that the civil suit has not been conclusively determined since the High Court’s ruling in 2014, saying the temporary injunction has negatively affected the rice sector.
“URA has been charging VAT on companies that were not part of the suit and these companies have paid tax amounting to over shs38 billion since 2014. Some of these companies have closed shop because they cannot compete with the 14 companies that are not paying the tax,” said Kashaija.
He added that Government had lost over shs36 billion over a five-year period, due to non-payment of the import tax on white rice by the companies covered by the court order.
Busia Municipality MP, Geoffrey Macho said the monopoly of players in the rice sector had inevitably caused an employment gap, owing to the dropping out of smallholder companies that employed a bulk of workers and farmers.
“In this meeting, we have representatives from rice growing associations across the country who have told us that over 400 people have lost jobs because the 57 rice companies that employed them are no longer active,” Macho said.
John Baptist Nambeshe (Manjiya County) said the civil suit had to be followed up to its completion, adding that, “It has made it unproductive to invest in the rice sector because of this discriminative taxation on importation, by the Uganda Revenue Authority”.
Mohamed Sekatawa, a rice grower from Mbale also raised concern over Government issuance of 16,000 hectares of wetlands to selected rice companies yet the National Environment Management Authority (NEMA) had evicted small-scale farmers.
The Speaker undertook to follow up the petition by having it presented on the Floor of Parliament.
“We shall demand an explanation from the Attorney General on the injunction, because five years is a lot. This will not be subjudice because we will be asking for a way forward,” said Kadaga.
She also said that Parliament through the Committee on Finance, would seek an explanation from the Uganda Investment Authority (UIA) and NEMA over the distribution of land in wetlands to rice companies.