Companies okayed to import rice to Uganda tax free

At least three rice trading companies have been exempted from Value Added Tax (VAT), to import rice to Uganda to deal with the scarcity of rice created by the COVID-19 Pandemic.

The three companies include Gotovate Uganda limited, Williex Commodities limited and Akhcom Limited.

According to the Rice Business sector association Limited, the three companies were cleared last month by both the ministry of finance and that of trade, to import the rice into the country.

Isaac Kashaija, the chairman Rice Business sector association said currently the demand for rice in Uganda stands at around 380,000 metric tons per month, with total local production of approximately 180,000 metric tons per season leaving a deficit of about 200,000 metric tons per month.

"If we need rice, we either have to help farmers grow more rice or increase the quality and quantity of our rice to lower the demand, but before we do that, we have to allow rice imports," Kashaija said.

He noted that to address the rice shortage in the country one of the companies, Gotovate Uganda Limited, was allowed to import tax free, 50,000 metric tons of rice from Tanzania, to Uganda.

He said the company requested for the tax waiver between the period of August to December 2020, to save Ugandans who were in total lockdown.

The move to exempt Gotovate from tax was however challenged by other stake holders saying it would affect local rice farmers.

Kashaija defended the issuance of an import permit to Gotovate saying it would help address the scarcity of rice in the country.

He also noted that the government had cleared other 14 rice companies to import rice into the country in 2014, after they challenged parliament legislating against tax exemption on imported rice from Tanzania and other East African Community (EAC) member states, to Uganda.

"It is not only one company that is importing exempted rice from Tanzania to Uganda, 14 companies have been importing the same rice for the last six years, with exempt taxes of over sh1 trillion," Kashaija said.

According to the rice business sector association, a decision was taken following the East African customs Union protocol article 15 that prohibits partner states from imposing duties on products originating from partner states as urged by the 14 companies in the court case against URA in 2014.

The rice companies challenged URA in court, for charging them tax on rice imports, despite the EAC protocol barring such taxation.

"The government through the attorney general should expeditiously dispose of the case in the court of appeal. It has broken the records of justice system of Uganda by taking now close to seven years," Kashaija noted.

Fourteen rice trading companies appealed to court against the 18% VAT charge then and court declared an injunction and since then the case has never been resolved.

The growers of rice also implored the government to help rice farmers to improve and increase on quality and quantity of rice that can easily compete on the market.

They attributed the high volume of rice importation from Tanzania and Pakistan to Uganda, to the bad quality of rice grown in Uganda.

"When you buy rice from Uganda and that from Tanzania, the aroma is different, most Ugandans go for Tanzania rice because the aroma is different and good," Kashaija said.