Pressure from coffee traders compels ministry to stay implementation of 1% withholding tax
The Ministry of Finance, Planning and Economic Development has put on hold an early decision to tax coffee traders 1 per cent withholding tax, which was supposed to be put into action with effect from 1st July 2018.
The decision was reached in a meeting that brought together Uganda Quality Coffee Traders and Processors Association, Ministry of Finance and Uganda Revenue Authority (URA) officials, on Friday at Delta Hotel, Bweyogerere, in Kira Municipality.
“The Ministry of Finance is studying your grievances on the 1 per cent withholding tax, whereby URA will not tax you until the law on this tax is gazzetted. Iam therefore in this meeting to hear more of your complaints on the tax, so that I forward your concerns to my superiors for consideration”, said Clives Ainebyona, a Tax Policy Officer at the Finance Ministry, amidst thunderous applause from the coffee traders.
The Cofee Traders Association Chairman Amos Kasigi said coffee traders risk running out of business if government taxes them the 1 per cent withholding tax in a value chain manner, comprising farmers, traders and exporters.
He added that; coffee traders are not against paying taxes but that the tax should be paid at least once in a year.
Patrick Nabongo, the Vice Chairman of the Coffee Traders Association raised fears that coffee farmers are likely to abandon coffee farming and resort to growing other crops, if the 1 per cent tax is levied on them.
“Government should endeavour to carry out consultation with all stakeholders in the coffee industry before coming out with a tax, because coffee prices are governed by international markets”, he said, adding that currently; coffee prices have fallen from shs 5600 to shs 5300 per kilogramme.
“This means that coffee traders are likely to make loses on their stocks, which they bought from farmers at higher prices. Coffee business is not like maize, beans or Pineapple businesses, whose markets are local”, he added.
The URA client relations officer Alex Mugasha laboured to explain to the coffee traders the importance of keeping books of accounts.
He said books of Accounts help URA to determine how much to charge a trader in taxes. He also advised them to acquire Tax Identification Numbers (TIN) to avoid being penalized for tax evasion.
