The Uganda Revenue Authority (URA) has reported a substantial increase in tax revenue from fish maw exports since the introduction of an eight percent export levy under the Fish (Amendment) Act 2021. According to officials from URA who appeared before the House Committee on Agriculture on November 30, 2023, the government is now earning annual revenue of Shs 9.136 billion compared to Shs 521 million in the previous financial year (2022/2023).
Abel Kagumire, Commissioner of Customs at URA, explained that the eight percent export tax on the total value of fish maw exported from Uganda has contributed to this boost in revenue. However, concerns were raised during the committee meeting:
- Impact on Fish Maw Trade: Kagumire admitted that the export levy had discouraged investment in the fish maw export, leading to declined export volumes. MPs expressed the need to review the economic impact on the entire fish maw trade, considering the increased revenue but narrowed tax base.
- International Market vs. Local Realities: MPs, such as Hon. Robert Migadde, criticized URA’s approach of basing the export levy on international market rates. Migadde argued that Ugandan fish maw is likely being smuggled into neighboring countries with more favorable tax regimes, like Kenya and Tanzania.
- Withholding Tax and Tax Compliance: Fish maw traders requested exemption from the six percent withholding tax. Kagumire responded that tax compliance among fish maw traders is rare, making them ineligible for exemption. He noted that URA is dealing with several cases of fish maw smuggling.
- Industry Organization and Taxation: Kagumire highlighted that the fishing industry in Uganda lacks organization compared to other industries. MPs, including Hon. Julius Tusiime, emphasized the need to review tax regimes’ impact on the fishing industry and treat fish as other agricultural products under taxation.
- Research on Fish Maw Trade in EAC States: Charles Tebandeke, a representative, urged URA to investigate the booming fish maw trade in other East African Community (EAC) states, particularly Kenya and Tanzania. He suggested that favorable tax regimes might contribute to their high export volumes.