Manufacturers call for better tax dispute handling system

KAMPALA, UGANDA | THE INDEPENDENT | Ugandan manufacturers are calling for reforms in the tax dispute resolution frameworks to make processes faster.

Under the current systems, they say, affected parties have to take long periods characterized by uncertainties that in the end affect the business operations.

The Uganda Manufacturers Association now says there should be a better system through the Tax Dispute Reform to unlock billions of shillings and in turn boost the economy.

The UMA Economic Business Committee, says that currently, more than 330 Billion Shillings is locked up in prolonged tax disputes, saying this is creating a crisis that should be resolved.

The committee cited as a major concern the mandatory 30 percent upfront payment required of a taxpayer before being allowed to challenge a tax assessment.

“This rule burdens businesses regardless of the dispute’s outcome,” the committee says in a statement from their meeting. “If the assessment is correct, government programs face delays as funds remain tied up. If incorrect, businesses lose critical capital needed for growth,” they say.

The manufacturers body is now advocating for the revision of the 30 percent payment rule to ease cash flow pressures on manufacturers.

They are also calling for a process to expedite dispute resolutions to unlock trapped funds and spur economic activity, and also for a public-private dialogue for fairer tax policies.

“With manufacturers contributing significantly to GDP, resolving this bottleneck could be a game-changer for Uganda’s economy,” they say.

The manufacturing sector accounts for between 16 and 17 percent of the national economy and directly employs more 1.3 million people, while indirectly supporting more than 4.5 million.

However, the manufacturers are not only suffering the effects of the tax system.

Like many other sectors, a big chunk of their revenues remains held in government arrears that are estimated at more than 3 Trillion Shillings, according to the Ministry of Finance, Planning and Economic Development .

Unpaid monies for goods and services, especially from government-funded projects, lead to cash flow problems for manufacturers. This can make projects more expensive in the long run and hinder overall economic growth.

They also contribute to the 7 Trillion Shillings that is held in land related disputed currently in the courts of law.

****

URN