Rice prices skyrocket as importers pause operations due to 18% VAT levy

As food prices continue to increase across the country, rice importers especially from Tanzania have paused their operations following the reinstatement of the 18% Value Added Tax-VAT levy. 

Rice prices skyrocket as importers pause operations due to 18% VAT levy
Story by Mukama Evart Photo :

As food prices continue to increase across the country, rice importers especially from Tanzania have paused their operations following the reinstatement of the 18% Value Added Tax-VAT levy. 

Tanzanian Super rice is some of the most consumed types in Uganda and costs less than the Ugandan Super.

However, for the last two weeks, no single rice truck entered the country, forcing traders to increase a kilogram of rice to Shillings 4000 from the usual Shillings 3500.

Uganda Revenue Authority-URA on Monday, May 9th allowed 10 trucks each with 30 tons to enter the country using the old tax system where importers would only pay 6percent in withholding tax. 

An April 21, 2022 letter addressed to the commissioner of customs at the Uganda Revenue Authority from the State Minister of Trade and Cooperatives Harriet Ntabazi indicated that Uganda imported 41,000 metric tons of rice, which is beyond the national deficit between January to April this year.

The minister further indicated the need for remedial interventions to protect the local rice sector. “This is, therefore, to guide that you cease clearance of VAT exempt rice imports until further notice excluding 15 companies operating under a court order,” reads part of the letter.

In July 2014, a group of 15 rice importing companies sued the URA Commissioner General seeking to stop the 18 per cent VAT levy. 

These include among others Akhcom Limited, Armour Trading company Limited, S.W.T Tanners limited, Ssunad Limited, Gloree International Limited and General Agencies limited. They lost the petition in the commercial court and appealed the decision in the high court, which granted them a temporal injunction stopping the implementation of the directive. 

According to Jane Namukwaya, the vice-chairperson of the Kampala Rice Trader’s Association, the move by the government indicates that they only favour a few individuals, whose companies are no longer even trading in rice.

She adds that they decided to suspend their operations because when they pay the 6 percent withholding tax plus the 18 percent VAT, a bag of 100kg of rice will cost Shillings 500,000 at wholesale, which means a kg will go for between Shillings 6000 and 7000 on retail when they factor in transport.



Kagwirawo