Local animal feed manufacturers under their umbrella body, the Uganda Animal Feeds Manufacturers Association have said the move by tax body URA to levy a 10% import duty on concentrate feeds will help boost the local industries.
URA recently started levying 10% import duty on top of the 18% VAT on concentrate feeds, a move that was protested against by importers of the feeds.
However, speaking during their meeting on Monday in Kampala, the manufacturers said the move will not only ensure fair competition but will also support local industries.
“Factories in many parts of the country that were initially manufacturing these animals feeds have collapsed because of the unfair competition from these imported concentrate feeds that importers don’t pay taxes . In the end, it is not only manufacturers who lose out but also farmers will not have anywhere to sell their produce including sunflower, soya beans and cotton seed among others,” Aimable Mbarushimana, the operations director for Murwana J.Peter Stores Limited.
Animal and poultry premixes as well as animal feeds are catered for under the VAT Act but concentrates are not catered for under the same law and therefore would attract VAT of 18% and Import Duty of 10%.
Officials from the tax body recently said the law was not implemented in the past because the companies had been misclassifying and calling the feeds premixes, yet they import concentrates and therefore were not paying taxes for them.
Speaking on Monday, the animal feed manufacturers said the importers exploited this loophole to ensure they don’t pay taxes and therefore imported slightly cheaper feeds and that this way, the locally manufactured feeds could not fairly compete with them.
“This is unhealthy competition that these people want to exploit loopholes in the tax system to import goods without paying any taxes. It is time the private sector and government sat down to correct the narrative of doing business in Uganda. We can’t continue doing business like this. Something needs to change in the way we do things,” said Aimable Mbarushimana.
According to David Waliggo, a policy, legal and tax consultant, it makes no sense for the country to keep importing everything yet there is capacity locally to produce the same goods to satisfy the local market and also export others.
“They import goods largely not manufactured in Uganda but because of contracts they have made in Europe, Asia, America and China they have decided to become brokers and agents of those companies. When they import these concentrate feeds, they are not helping the economy of Uganda to grow but rather foreigners to sell their products. In most cases, what they import is later resold. This needs to change. We need to support local manufacturers,” Waliggo said.
“The economy has been run in a wrong direction of having Uganda as a dumping ground for goods going to other markets. Uganda’s remedy is import substitution and putting much emphasis on agriculture. We need to support our farmers who will be supplying products to these factories.”
Describing it as quagmire, Waliggo said it is high time Uganda adopts a new path but stopping importation and supporting local manufacturers of the previously imported animal feeds.
“We are not sure of the quality of feeds we are importing into the country yet we can ably do it locally by having regulations on how to do it.”
Tony Gadhoke, the CEO for Mukwano Industries emphasized the need to support local manufacturers produce the feeds locally as a way of supporting the entire chain right from farmers to the sellers of animals feeds.
“We buy raw materials for animal feeds from local farmers. We buy soya beans and sun flower among others and if we are forced out of business, it is not only us to suffer but also farmers and many others employed in the supply chain,”Gadhoke said.
The Uganda Animal Feeds Manufacturers Association is set to present its case to the parliamentary committee on trade.