Kampala – KACITA, a leading business support association has protested against the new tax rates imposed on textile material after receiving a petition from members who deal with textile materials.
Notably, these are raw materials for local tailors and fashion designers. The petition is against the new rating system whose effective date was 1st July especially the rates of per kilogram which have been highly rated than the practical.
The business community has always been a complaint and welcomed these new tax measures.
“Let the ministry of finance come out clear, and put aside these new tax guidelines, allow those who have imported to clear using old values and guidelines, let them put an investigative arm and we get the facts clear otherwise if it is allowed to go the way it is, we are going to create one importer and he starts selling locally to the Ugandans and he will become a monopolist” Everest Kayondo, Chairman KACITA Association said.
Following the above, the import duty fees were increased as per the communication below. For textile-fabrics, the decision was to Grant Uganda a stay of application of the EAC CET rate of 0%, 10% and 25% and to apply a duty rate of 35% or USD 5.0 per kg whichever is higher for one year. The USD 5.0 per kg rate given is way too high and not practical considering the average purchasing price of the same material.
This has generated a heavy outcry from importers of these items most of whom have been paying between 45 – 50m for 20ft container and 70-80m for 40ft container respectively. With the introduction of the new rating, taxes have risen to an average of over 400m for the same 20ft containers and 900 of the same 40ft container which is way beyond the total value of the goods in these containers.
Even when the business community embraces and appreciates all the efforts by the East African Community, there is a need for economic and business consideration before implementations of any recommended policies.
As KACITA Uganda, we made a thorough research on this specific polyester imported material together with our members and no factory produces them including NYTIL, Sunbelt and Fine Spinners among others.
This, therefore, motivated the members to mobilise themselves after being trained and equipped by KACITA Uganda and its partners and started small cottages with an intention of starting big factories as per the president’s call (Import substitution, value addition and business diversification) to make them material if they could be granted government incentives including financing and provision of land.
They now import raw material which they have utilised in production of a variety of textile products including, curtains, masks, wedding gowns and accessories, gents, kids and ladies wear among others. This therefore has added a lot of value to the Ugandan enterprises, created a lot of jobs to most Ugandan population.
Application of the USD 5.0 per Kg clearly means government is frustrating importation of these raw materials (Polyester) which in turn will suffocate the supply of the same required material for the local production in the textile sector that includes Tailors, designers, cutters and many other casual labourers.
This would, therefore, encourage the importation of finished products that would have been locally manufactured. It also discourages the big population including Youth and women whom we involved in training and creating employment through these cottages industries as a measure of embracing and implementing import substitution, through Buy Uganda Build Uganda (BUBU) initiative and value addition in the textile sector.
In addition, there is a lot of business support that our members extend to local manufacturers by purchasing from them all other locally available material for the production of uniforms and other items. This should be accredited since they only import the material that isn’t available with the local manufacturers.
We have realised many foreign economies extending more business incentives which include a reduction in various tax rates to attract more investors both local and foreign but to largely boost local businesses especially all vale addition enterprises as a measure to respond to COVID19 effects on businesses.
This is the same the local textile industry would also expect from our government especially of those items that are not locally available. We, therefore, request for a reversal of this proposed rate especially the USD 5.0 per kg since it is practically impossible for our Ugandan business. In our effort to compliment (BUBU) initiative of Ministry of Trade, we decided to embrace value addition through importing both raw-materials and machinery as well as creating employment for the Uganda vulnerable population especially the youths, women and people with disability including both educated and uneducated.
Our members are very ready and willing to collaborate with their manufacturing partners abroad to enable them to establish same factories and availing same producing machines in Uganda which would enable the production of the same imported modern material texture given the required incentives especially land and financing.
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KACITA is a business support association in Uganda, established and registered in 2001. It was re-registered in 2009 as KACITA – Uganda in the mandate to cover the whole country. The main aim is to facilitate trade, bring together the business community, and mobilize them into a viable, organized and socially sustainable market place.