Poultry farmers, dealers protest new taxes on feeds

Business

The fraternity of poultry farmers, feed ingredient dealers and different stakeholders in the poultry value chain have protested the new taxes on poultry animal feeds they say have been illegally introduced by Uganda Revenue Authority (URA).

Addressing the media on Sunday, they said that the new import duty of 10% and VAT (18%) taxes on animal feeds and premixes by URA are putting threat on the animal husbandry industry.

They say the taxes are illegal and unjust because the VAT is being introduced without amending the VAT Act through the right channels (Parliament/Ministry Finance) and without informing the stake holders who have cargo in transit.

“The tax tariff has been very clear and the Parliament of Uganda was very intentional about exempting animal feeds and premixes from paying VAT to spur the growth of the industry, which worked amazingly well,” Martin Roy Lukwago, Chairman Layers Association said.

The farmers and dealers say that two weeks ago, they learnt of a communication to all importers of animal feed concentrate premixes into Uganda about the immediate application of VAT (18%) on the already exempted animal feeds and premixes, yet these products have been exempted since 2017.

However, they accuse URA of starting to execute these taxes without giving them time to respond to the communication.

According to Peter Ssenkungu, the secretary of the Uganda Poultry Association, the tax on inputs to the sector are being implemented at a critical time when farmers and feeds producers are trying to recover from the negative economic impacts of Covid-19 lockdowns.

Giving an example of piggery sector, he highlighted that farmers and producers are only making a 10% profit to support their livelihoods, amidst other challenges like high cost of inputs.

He said that the new taxes would eat into the already small profits the farmers and producers are making.

“The impact today with the introduction of the tax would mean that you would be producing your pork anywhere within Uganda slightly more at Shs10,762 at the farm level. But the selling price won’t increase because what this tax means that you’re just going to absorb it as a cost but you cannot pass it because the meat am I’m selling is not vatable out there,” Ssenkungu said.

He explained that whereas the price of pork still remains Shs10,000 and has not changed, the net impact is that a farmer will not be able to make any profit. He says they will instead be making a loss of 7.6%.

”Among the challenges of Swine Fever which is never sorted out, the impact on feeds will be that they will make a loss of 7.6%. In our livestock sector, feeds contribute 75-80% to the cost of inputs. So, the impact of anything around the feeds is impacting these sectors especially the pig sector which I’m talking about (80%). So there’s no way anyone doing piggery will stay in the business,” Ssenkungu noted.

Andrew Rubeihayo, a diary and poultry farmer said that they were notified by URA about these these taxes and that the tax body did not give them time to respond.

“As we were planning to respond, they told us that they are assessing all these taxes in all the businesses for the recent years and this made people having tax obligation of as high as Shs 40Bn, Shs 25Bn with the lowest one being Shs 600Bn,” he said.

Rubeihayo warned that unless these taxes are scrapped, several people will withdrawal out of the bussiness leading to unemployment since government does not have any poultry farm.

Sebastian Jaggwe, a commercial poultry farmer appealed to the president to intervene in the matter and stop the taxes by URA which he termed as unfair and unjust.

“My appeal is if we can find a way of finding the President and talk to him directly..You cannot tell somebody to pay a tax in retrospect. You’re initiating a new tax and then start calculating backwards. How do you expect that business to survive. You cannot just come in a situation of this kind where all businesses are crumbling and you’re introducing a new tax. Is that fair? Is that just?” Jaggwe wondered.

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