The Uganda Revenue Authority (URA) is poised to potentially collect over 36 million shillings from a textile smuggler intercepted in Jinja earlier this week.
Enforcement officers from URA in Jinja intercepted a fully loaded Toyota Kluger suspected of smuggling textiles from Kenya. The vehicle was found to be carrying 300 kilograms of plain polyester textile from India and 800 kilograms of Kitenge fabric. The estimated revenue from these seized goods amounts to 36,531,844 shillings in taxes and penalties.
Data from the World Bank indicates that Uganda imported textiles worth USD 327,411.13, constituting 3.7% of total imports in 2020. The majority of these textile imports originate from countries such as China, India, Vietnam, and Europe.
In 2021, Uganda adjusted its import duty on textiles following an amendment to the East Africa Community Customs Management Act (EACCMA) 2004. The import duty on textiles was increased from 25% to 35% of the CIF (Cost, Insurance, and Freight) value, or USD 3/3.5 per kilogram, whichever is higher. However, after discussions with the Ministry of Finance and URA, the government suspended this tax collection method for a year, only to reintroduce it in the fiscal year 2022/2023. This change in trade tariff has sparked tensions between textile traders and the government over the past three years.
In April 2024, traders in Kampala staged a sit-down strike and closed their shops in protest against various tax issues, including the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), and called on the government to reduce the import duty on textiles.
During a meeting with traders in March of the same year, Mr. Ramadan Ggoobi, the Permanent Secretary of the Ministry of Finance, and Mr. John Musinguzi, the Commissioner General of URA, requested traders to provide time to review these tax policies.
“We asked the traders to give us time to convey their requests and observations regarding this specific tax back to the Cabinet, after which Cabinet can make a decision,” remarked Mr. Musinguzi during a recent interview on the NBS Morning Breeze show.
Mr. Musinguzi also highlighted that tax measures such as the import duty on textiles are deliberate efforts by the government to support the burgeoning textile manufacturing industry, which has the potential to position Uganda as a leading producer of quality cotton products rather than merely exporting raw materials.
In accordance with sections 199(iii) and 200 of the EACCMA, the owner of the impounded Toyota Kluger is subject to a fine not exceeding USD 5,000 for engaging in smuggling activities with the vehicle.
