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URA clarifies on tax treatment of textile imports for the financial year 2021/22

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The Uganda Revenue Authority (URA) has said that textiles and garments which are not manufactured in Uganda since they can’t cannot be adequately sourced locally have been maintained at an import duty rate of 35 percent. These textiles account for 90 percent of the clearances by the textile and garments traders.

In a statement from Ian Rumanyika, the URA acting Assistant Commissioner, Public and Corporate Affairs, said the textiles and garments that can be sourced locally from Ugandan manufacturers which account for 10 percent of the imports by the traders shall be maintained at the rate of 35 percent or $3.0 per kilogram for textiles or 35 percent or USD 3.5 percent per kilo for garments as approved by the council of ministers under the East African Community Gazette Legal Notice.

The Kampala City Traders Association (KACITA) last week threatened that starting September 1, they will remain at home as a peaceful demonstration in protest to what they termed as government’s deliberate increment of taxes on textiles and garments.

KACITA claimed that taxes of textiles and garments in the country have been increased adding that given the current situation of Covid-19, this has affected the traders.

Rumanyika said that the 35 percent was the tax rate applicable on textile for the Financial Year 2020/2021 and therefore status quo has been maintained.

Textiles have proved to be one of the most critical sectors in job creation in Africa. An example is Ethiopia, where the sector employs more than 2.5 Million people, with women accounting for 70 per cent.

He added that the government is continuing to engage the leadership of Kampala City Traders Association and all the other traders’ Associations to achieve a shared appreciation of this position and the collective benefits that come with it.

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