URA will potentially collect more than 36 million from a textile smuggler that was intercepted in Jinja on Tuesday this week.
The URA enforcement officers in Jinja intercepted a Toyota Kluger that was fully loaded with smuggled textiles from Kenya that was loaded with 300kgs of plain polyester textile from India and 800kgs of Kitenge fabric that is estimated to yield revenue worth UGX 36,531,844 in taxes and penalties.
According to data from the World Bank, Uganda imported textiles worth USD 327,411.13 taking up 3.7% of imports in 2020. The majority of these imports come from China, India, Vietnam, and Europe.
In 2021, following an amendment to the East Africa Community Customs Management Act (EACCMA) 2004 to increase the import levy on textiles into the bloc, Uganda increased the import duty on textiles from 25% to 35% of the CIF or USD 3/3.5 per kilogram whichever is higher. after talks with Ministry of Finance and URA, the government halted this method of collecting taxes on textiles for a year, but later reintroduced it in FY 2022/2023. To date, this trade tariff unsettled textile traders’ relations with the government over the past 3 years.
In April 2024, traders in Kampala demonstrated in a sit-down strike and closed their shops protesting a number of tax issues such as EFRIS, and added a call to government to reduce the import duty on textiles.
In a meeting with the traders in March this year, the Permanent Secretary Ministry of Finance and the Secretary to the Treasury (PSST) Mr Ramadan Ggoobi, together with URA Commissioner General, Mr John Musinguzi, asked the traders for time to have the policy reviewed.
“We asked the traders to give us time to relay these requests and observations from administering this specific tax back to Cabinet, and then Cabinet can make a decision,” noted Mr Musinguzi during a recent interview on the NBS Morning Breeze show.
Mr Musinguzi also noted that tax measures such as the import duty on textiles are deliberate steps by the government to promote the young textile manufacturing industry which could easily make Uganda a leading producer of good cotton products as opposed to exporting the raw material.
Following sections 199(iii) and 200 of the EACCMA, the owner of the Toyota Kluger impounded in this operation is liable to a fine not exceeding USD 5,000 for the means of conveyance in smuggling.