After a six-hour wait, 61 handpicked traders finally met President Museveni at State House Entebbe on Friday. The meeting did not end until an hour shy of midnight. Most importantly, Mr. Museveni deftly played his cards to ensure that the main protagonists in a standoff that paralyzed business for days—the traders and the taxman—emerged with a sense of victory.

“We partially won,” one trader told Sunday Monitor on Saturday.

Mr. Ibrahim Bbosa, the taxman’s assistant commissioner in-charge of public and corporate affairs, was quick to clarify that “the President also made it clear that he would not tolerate any form of non-compliance with tax.”

Leaders from various traders’ associations, including Kampala Capital Traders Association (Kacita), Federation of Uganda Traders Associations (Futa), United Arcades Traders and Entrepreneurs Association (Uatea), and the Uganda Dealers in Used Clothes and Shoes, attended the Friday showdown talks at State House. Also present were ministers from the Finance and Kampala dockets, as well as officials from the Uganda Revenue Authority (URA).

The focus of the talks, as stated by one association leader, centered on the “unfair value added tax” (VAT), the “rough” implementation of the Electronic Fiscal Receipting and Invoicing System (Efris), import duties on fabrics and garments, withholding tax, and the presence of Chinese retailers in downtown Kampala.

“About VAT, the President realized it is a confusing tax because his opinion was the same with the traders, but he said he will not rush with the decision [and] he told us that [government technocrats] are going to study and analyze it so that by May  7, when he is meeting us, he should come with a conclusive resolution,” Dr. Thadeus Musoke Nagenda, the chairperson of Kacita, said yesterday.

He added that Mr. Museveni also ordered the immediate stoppage of the enforcement of Efris and the immediate suspension of penalties. URA was also barred from issuing new ones as well as collecting those already issued.

The alleged rough enforcement of Efris by URA officials largely prompted Kampala-based traders dealing in merchandise, clothes, and garments, among others, to close their shops. The system was rolled out by the taxman on January 1, 2021, as an automated compliance process mandating all VAT taxpayers, whose businesses make more than Shs150m annual sales, to enroll in it. Traders protested, saying they were not aware of its functionality, and its enforcement by URA made it unbearable.

“The only pending issues are the 35 percent value and $3 and $3.5 percent per kilogramme, but for others, it is like the President gave a breathing space for traders and then we resolved to start operating as other issues are being resolved,” Dr. Nagenda told the Sunday Monitor yesterday.

Mr. Museveni confirmed meeting the traders, posting on his official platform that several issues—such as the unsuitability of Efris to traders, calculating taxes on textiles in kilograms, the proposed increment of the VAT threshold from the current Shs150m annual turnover, as well as manufacturers who engage in wholesale and retail—came up for discussion. The President noted that he asked the traders for some time to allow him to do research and make informed decisions.

Mr. Museveni will hold a consultative meeting with technocrats from the Finance Ministry, URA, and others on April 24. Thereafter, the President will meet all traders at Kololo Independence Ceremonial Grounds, where a final decision on all matters will be taken.

“In the meantime, I have directed that URA refrain from issuing penalties and recovering any penalties that have already been issued, but taxpayers must continue to pay their taxes as usual,” President Museveni wrote on his platform.

Traders told Sunday Monitor that no minister was given a chance to speak at the meeting on Friday. Only Mr. John Musinguzi Rujoki, the commissioner general of URA, gave his two cents, explaining to the President the taxes and their values.

Mr. Rujoki, we were told, justified why VAT is charged four times—i.e., from the manufacturer/importer, wholesaler, retailer, and final consumer.

“The President asked [Mr. Rujoki] why VAT is not calculated once in the factory or on importation, but he said the country will lose a lot of taxes if that is done,” Mr. Andrew Rubeihayo, the chairperson of the Uganda Dealers in Used Clothes and Shoes who attended the meeting, said.

This concern, according to traders who attended the meeting, is one of many that will be addressed when they meet Mr. Museveni on May 7.

The President revealed on his platform that the traders should answer a vital question: “Do we want to build our country, Uganda or other countries by trading in goods produced by them?”

He added: “Must we continue to cause a haemorrhage of the little that we have made through agriculture and other sectors by sending our money outside? Uganda should not be a supermarket for other countries.”

Mr. Ibrahim Bbosa, the URA spokesperson, confirmed the developments and said the way forward will be given by the President at Kololo after the engagement with technocrats.

“The President listened to the traders’ complaints and promised to study them further. He also expressed his desire to avoid making wrong decisions because he was rushed by the traders,” Mr. Bbosa said.