Traders not moved by Taxman's waiver of unpaid EFRIS penalties

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Traders not moved by Taxman's waiver of unpaid EFRIS penalties
A receive machine

The Uganda Revenue Authority is set to waive penalties issued during the enforcement of the Electronic Fiscal Receipting and Invoicing System (EFRIS), Commissioner General John Musinguzi has revealed.

According to URA, Musinguzi made the revelation while appearing on a local radio station.

“We are going to waive penalties for those traders who were using EFRIS for the first time and did not know how to use the system. We will invite them to our offices to be taught on how to use the system,” he said.

URA asked the affected traders to visit their offices from Monday, May 27 till May 31.

EFRIS is a digital system that facilitates the direct transfer of Value Added Tax (VAT) billing information between businesses and URA.

Because of the numerous difficulties with EFRIS, including its high cost of compliance, lack of understanding by most traders, and application to all traders regardless of VAT registration status, the traders had objected to its implementation.

Traders also expressed concern that EFRIS remained complicated and necessitated the employment of individuals with IT and accounting skills, yet the majority of wholesale traders have minimal formal education.

Kikuubo merchant Scovia Nakalema told this outlet that URA should freeze the entire system instead of just eliminating penalties because it is very expensive.

"It is not particularly crucial to meet with URA authorities. To be honest, as traders, we are against that system. Let them devise an alternative structure. The expense of this EFRIS is prohibitive. We will continue to demonstrate," Nakalema said.

"In addition to the costs related to using EFRIS, the traders have been facing the dilemma of being penalized for non-compliance," said Lubega Mosese a trader from Kikuubo.

"The penalties under the law are twofold: failure to use EFRIS attracts a penalty of at least Shs8 million per month, and failure to issue e-Receipts or e-Invoices attracts a penalty of at least Shs6 million per month.’

"Whose businesses can survive in such a situation, and yet we don’t know how the system works?"

According to Kampala associated advocates, waiving off penalties is not the solution, To better-understand the current uproar against EFRIS, one needs to see it through the lens of a business owner in Uganda, especially one in the informal sector.

"URA needs to do more than teach traders about EFRIS. They need to sensitize taxpayers about the different tax heads, how and to what they apply," the statement reads.

"They also need to delve further into the benefits of compliance, creditable input VAT and allowable deductions of business expenses, for tax purposes. EFRIS is an enforcement mechanism, which, if enforced and used correctly can have vast benefits for both URA and taxpayers.’’

Recently, traders went up in arms over the implementation of EFRIS and related penalties, which culminated in the May 7 meeting with President Museveni.

During the meeting, the President directed URA to waive penalties that had been issued to traders and upheld the usage of EFRIS. He also called on the URA to sensitize traders on the system.

Efforts to get in touch with URA to find out how much was fined for using EFRIS improperly was futile.

EFRIS is a digital system that facilitates the direct transfer of Value Added Tax (VAT) billing information between businesses and URA

In its latest statement, URA promised to provide taxpayers who have insufficient understanding of the new EFRIS system with “relevant knowledge for compliance going forward.

Traders from other districts were advised to visit the nearest URA regional offices for similar assistance.

“URA encourages all traders already using EFRIS technology to continue complying with all EFRIS laws and regulations. Staying compliant is essential to avoid enforcement actions and maintain a business-friendly environment," said the tax collection body.

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