Last week, officials from the Uganda Revenue Authority (URA) met with the leadership of the Mukwano Group of companies to discuss customs-related issues affecting their operations.
Commissioner of Customs Abel Kagumire led the URA team and acknowledged Mukwano’s significant contribution to Uganda’s economy, especially in championing the Authorized Economic Operator (AEO) program.
However, Kagumire expressed worry about the increasing trend of re-exporting cooking oil to South Sudan and the Democratic Republic of the Congo.
B.W. Rwabwogo, the General Manager-Operations at Mukwano, explained that the company is facing challenges in exporting to neighboring markets due to high costs.
He pointed out that the 10% import duty and 1.5% infrastructure levy on crude palm oil (CPO) in Uganda have raised business costs, making their products more expensive. Unlike Uganda, Kenya and Tanzania do not impose import duties on CPO.
Rwabwogo mentioned that the company that advocated for the import duty on CPO is now importing cooking oil from Kenya. Competitors are directly importing from Kenya due to the absence of import duties on raw materials (CPO) there.
He also highlighted the impact of the stay on the application of the Common External Tariff (CET) rate on stearic acid, affecting market access in Rwanda. Additionally, Rwabwogo expressed dissatisfaction with Kenyan buyers who purchase agricultural produce from Uganda, process it in Kenya, and export cheaper cooking oil back to Uganda.
In response, Kagumire acknowledged the challenges and attributed them to policy issues. He suggested conducting a thorough study on the impact of the import duty on CPO.
Kagumire emphasized the need to prioritize supporting local manufacturers over revenue generation. He mentioned observing Customs Commissioners in other regions defending their local industries and stressed the importance of a similar approach in Uganda.
Manufacturers also raised concerns about integrating their route sales into the Electronic Fiscal Receipting and Invoicing System (EFRIS).
Rwabwogo proposed finding ways to integrate route sales into EFRIS to facilitate sales invoicing. While currently using merchant codes and mobile money to track sales, they seek to align with URA’s tax collection efforts.
Management agreed to understand the business model better to address these challenges and support revenue collection efforts.
