Local animal feed manufacturers, URA make case for tax on feed concentrates before parliament

Animal feed manufacturers under their umbrella body, the Uganda Animal Feeds Manufacturers Association(UAFMA) told parliament that the import duty of 10% and VAT of 18% by URA on concentrate feed will help protect local industries from unfair competition from imports.

Poultry farmers recently protested the new import duty of 10% and VAT of 18% by URA on concentrate feed that they say will see the prices of eggs and poultry products go up.

They have since petitioned parliament over the same.

On Tuesday, UAFMA members made their case before the Parliamentary Committee on Trade, Tourism and Industry chaired by the Mbarara City South MP Mwine Mpaka.

“We support the tax because we think it is not something new but rather reclassification that is going to help our economy to develop its own capacity to manufacture animal and poultry feeds. One of the lessons we have learnt from covid is self-sustenance and supporting local manufacturers is one of the ways in doing this,” said Aimable Mbarushimana, the operations director for Murwana J.Peter Stores Limited but also a member of UAFMA.

“We need to have capacity building since what we import from outside can be ably manufactured locally.”

The animal feed manufacturers told parliament that in light with the move by government to implement the import substitution strategy; local manufacturers will be empowered through the tax that will limit imports of animal feed concentrate to ensure they can be manufactured locally.

“From 2001, we started a program to help support farmers produce sunflower locally and reduce on importing. This program has been a huge success with over 100,000 farmers documented to have benefitted from growing sun flower and soya beans that they supply to us but over the years, many have run out of business because we can’t ably buy all they produce because of lack of market for our locally manufactured animal feeds. This is attributed to the importation of feed concentrate into the country,” said Tony Gadhoke, the CEO for Mukwano Industries.

David Waliggo, a policy, legal and tax consultant with UAFMA noted that it is high time the economy got a new direction in regards import substitution.

“We can’t afford to have a country that imports everything including what it can produce locally. We need to protect our market from foreign dumping. We need to protect our country by imposing VAT and import duty on items coming from abroad but can equally be manufactured locally,”Waliggo.

However, the committee chairperson, Mwine Mpaka urged members of the Uganda Animal Feeds Manufacturers Association to return with proper documents indicating the capacity of the local manufacturers in producing the imported feed concentrate and animal feed in general.

URA defends tax

A team from Uganda Revenue Authority also defended the tax saying an audit found out that animal feed importers were undervaluing to ensure they dodge the tax.

“URA carried out routine desk audits and established that importers of concentrates have been misclassifying concentrates as premixes under subheading 2309.90.10 which attract import duty of 0% and is also exempt from paying VAT which has led to loss of government revenue,” said URA Commissioner General, John Musinguzi Rujoki.

The URA Commissioner General however insisted that the tax body is not introducing a new tax but rather correcting an anomaly that had been exploited by importers not to pay tax.

He noted that URA does not make tax laws but rather implements what has been passed by parliament.

He also noted that URA has engaged the Ministry of Agriculture and agreed in the interim that imports that are still under customs control and those in transit will be released in line with the existing customs procedures as they solve the impasse in 30 days.

Rujoki also noted that URA and Agriculture Ministry will harmonize their positions on the definition of concentrates in line with the Animal Feeds Bill 2020.