Coffee traders under their umbrella organisation, Uganda Quality Coffee Traders and Processors Association on Monday denounced the 1 per cent withholding tax levied on them, during the new financial years 2018/19, which started on July 1 2018.
The coffee traders voiced their concerns in a one day meeting held at Delta Hotel, in Bweyogerere trading centre of Kira Municipality.
“This withholding tax of 1 per cent per every coffee trader who exceeds shs 1 million sales turnout comes at a time when coffee prices are fluctuating on a downward trend at the world market. If a trader is subjected to this tax, it means one would end up losing the entire capital in taxes”, said the chairman of the Coffee Traders Association Amos Kasigi.
He said coffee traders are not against paying taxes, but that government should have at least conducted sensitisation campaigns to coffee farmers and traders prior to imposing the tax.
“It’s very difficult to explain this tax to coffee farmers at grass root level, as majority of them would think middle traders intend to cheat them on coffee prices”, he added.
Sam Matovu, a coffee exporter and Chief executive officer; Commodity Solutions, said majority coffee dealers have incurred Bank loans to carry out their businesses, thereby risking to run out of business if the 1 per cent tax is levied on them.
“If you compute the amount of money that goes on coffee taxes per year, plus Bank interest rates, it means the coffee trader will have no option but to run out of business”, he said.
Uganda Revenue Authority (URA) representative at the meeting Luke Amooti Banabakintu, laboured to explain the tax levied on the coffee traders.
He said URA mandate is to collect taxes on behalf of government and does not make tax laws.
“This 1 per cent tax was passed by Parliament and URA are only implementers”, he said.
He refuted claims that URA was carrying out double taxation on coffee traders.
“The 1 per cent tax is levied on value chain comprising coffee farmers, buyers and exporters respectively, excluding Value Added Tax(VAT)”, he said, adding that VAT is only paid by those who add value on coffee.