Uganda Revenue Authority's (URA) plan to introduce the Electronic Fiscal Receipting and Invoicing System (EFRIS) to Kampala City Traders Association (KACITA) traders has faced stiff resistance from the business community accusing the tax body of heavy taxation on businesses. 

In a move by the government to recover a trillion-shilling tax deficit by the end of June 2024, URA resolved to set up tax clinics to be able to reach out to traders especially those operating in cities, municipalities and towns about the new tax system. 

URA commissioner general John Musinguzi Rujoki while meeting KACITA traders on March 21, 2024, at UMA Hall in Lugogo, Kampala, said that EFRIS was introduced to curb tax evasion and increase government revenue collection. 

“This system should be used by all traders including transporters, retailers, wholesalers, manufacturers, distributors, bars and hotels and the general public,” he said. 

Busiiwa Lwanga, a trader addressing fellow traders during the meeting.

Small traders should consider mobile applications which can enable one to get a PDF version of the invoice and share it with their customers without printing it out from the printer which may appear expensive, he added. 

“EFRIS requires businesses to issue electronic receipts and invoices to their customers, which are then linked to the tax authority's system to verify the authenticity of the transactions for proper business assessment,” Musinguzi added. 

He, however, warned of penalties for non-compliance regarding EFRIS tax as spelled out in section 73b of the Tax Procedures Code Act 2014.

“A taxpayer for whom it shall be mandatory to use EFRIS and does not adopt the use of EFRIS is liable to pay a penal tax equivalent to the tax due on the goods or services, or four hundred currency points, whichever is higher,” he said. 

EFRIS usable on smartphones 

Hassan Wasajja, the URA supervisor EFRIS, revealed taxpayers can easily access the EFRIS App on smartphones and use it to create e-receipts and invoices which can be accessible by the URA tax system electronically without hustle. 

“Though EFRIS has not been widely used, retailers and wholesalers especially those in Kikuubo and Owino markets, it has been freely accessed on smartphones for those who do not have computers to generate e-receipts and invoicing like supermarket owners,” he said. 

When you search for the EFRIS app on your phone, it brings you how the URA manual directs you to do invoicing and e-receipting of customers electronically to be captured by the URA system anytime you do transactions, he elaborated. 

“Use your Tax Identification Number (TIN) and password which is a one-time password (OTP) already sent to you on your email,” he revealed, showing how it works on the phone. 

However, traders in Kikuubo Market have expressed concerns that the system will increase their costs and create unnecessary bureaucracy.

They argue that the system will require them to invest in expensive hardware and software and that the additional administrative burden will be a challenge for their small businesses. 

Sirajje Sebadduka, the chairman of Kikuubo Business Community, decried the EFRIS system saying that it drains their profits causing double taxation from goods imported from other countries. 

"We understand the government's desire to increase revenue collection, but we cannot support a system that will make it difficult for us to do business," he said. 

The traders have also raised concerns about the security of their business data, which will be accessible to the tax authority through the EFRIS system. They fear that the system could be vulnerable to hacking and data breaches, which could compromise their customers' confidential information. 

"We are already struggling to make ends meet, and the introduction of EFRIS will only make things worse if imposed on us because it will push us out of business," he added. 

Godfrey Katongole, the chairman of Kampala Arcades Traders Association (KATA) said that the system if used can destroy customer relationships with the traders because it tracks the confidentiality of all those involved in transactions. 

"We cannot risk our customers' data being compromised," said Katongole. 

Busiiwa Lwanga, also a trader in Kikuubo revealed that the EFRIS tax system cannot work among uneducated traders who lack the knowledge to handle bookkeeping and records especially those operating in Owino and Kikuubo markets located in the central business district. 

"We need assurance from the government that the system is secure and that our customers' information will be protected," he expressed. 

The opposition to EFRISS has prompted the government to reconsider its implementation in the Kikuubo Market. The URA resolved that it would engage with the traders to address their concerns and find a solution that works for both the government and the business community.