Nearly 50 trucks from Kenya, laden with Irish potatoes, have encountered major disruptions at Ugandan border points due to a significant increase in withholding tax implemented by the Uganda Revenue Authority (URA).

Around 30 of these trucks remain stalled at the Busia border, with another 20 detained in Jinja, as they grapple with a new tax regime that escalated the withholding tax on each truckload by nearly tenfold.

The tax hike, effective from April 12, has raised the per-truck withholding tax from Ush 120,000 (approximately $32) to Ush 1,200,000 (about $315).

This increase stems from an adjustment in the withholding tax rate to six per cent of the customs value, which has been set at $0.4 (Ush1,560) per kilogram of Irish potatoes, elevating the per kilo tax from Ush9 ($0.0024) to Ush93.6 ($0.025).

Ibrahim Bbosa, the URA Commissioner of Public and Corporate Affairs, defended the tax revision by stating that the valuation of Irish potatoes had been historically low, necessitating this fiscal adjustment. The URA’s move aims to correct what it deems an undervaluation of imported goods, particularly agricultural imports from neighbouring Kenya.

“We have reviewed and increased withholding tax on Irish potatoes coming into the country, but not to the value the importers are talking about,” he said.

He noted that there was confusion about the rates the importers were using.

Agents’ fears

Haji Ali Mande, the chairman Uganda Clearing Agents and Forwarding Association Jinja branch, said the implementation of the tax that started on April 12 was “hurriedly done” and “too high” for the importers.

“Whereas URA was saying it had increased the tax from Ush9 to Ush93.6 per kilogramme of Irish potatoes imported into the country, the trucks that were impounded in Jinja had paid Ush1,560 on each kilogramme,” he said.

“We just heard that 15 trucks carrying Irish potatoes from Kenya had been impounded by URA, only to be told that they had to pay a new levy of Ush1,560 on each kilogramme instead of the old levy of $0.058 (Ush220),” he added.

Mr Mande now fears that Kenya could retaliate and impose a blockade on Ugandan goods as has happened in the past.

Kenya, which is Uganda’s leading trading partner has in the recent past imposed bans on Ugandan goods, including sugar, sugarcane, maize, milk and eggs.

Mr Yahaya Kamba, a clearing agent who clears Irish potatoes at the Busia border, said because of the policy, URA impounded 15 trucks in Jinja, and a notice was sent to Eldoret, Nakuru and Kisumu, all in Kenya, instructing against dispatching trucks that have not paid the new tax.

Another agent at the border, Paul Chuka, said the increment in tax makes it very expensive for importers.

“When you compute the withholding tax with the Ush1,560 that URA is implementing, it pushes the importers into costs, requiring one to pay $200 fees (Ush800,000) to Uganda National Bureau of Standards, which is unaffordable,” he said.

Traders loss

Samuel Jumba, an importer of Irish potatoes based in Kisenyi, Kampala, said traders are counting losses after the products perished following their impounding by the tax body.

Mariam Milly Namwasa, another importer based in Mbale City, said the new tax was increasing the cost of doing business.

She said she buys one kilogramme of Irish potatoes at Ksh30 (about Ush900, $0.24). Since she incurs transport costs, she sells each kilogramme on the Ugandan market between Ush1,500 ($0.39) and Ush2,000 ($0.53). She says she fears that the new tax on each kilogramme would make it difficult for her to access the market.

Mr Juma Yahaya, the Secretary-General of Uganda Clearing and Forwarding Association — Busia said the tax risked making the Irish potatoes “totally unaffordable” to Ugandans.

“Importers are going to push the cost to the final consumer, meaning if a plate of Irish potato chips has been going for Ush3,000 ($0.79), we should expect to buy it at not less than Ush6,000 ($1.58),” he said.

Mr Pius Baleno, a truck driver, said even after two days, he was yet to have his goods cleared to proceed to Uganda because of the new tax policy.