Is EFRIS Squeezing Taxpayers or Introducing New Taxes in Uganda? - Wabusimba Amiri

Recent protests among traders in Uganda, sparked by new taxes and the introduction of EFRIS, highlight pressing concerns about taxation. As a Ugandan diplomat, I see these events as indicative of broader issues with representation. Unlike in Kenya and Tanzania, where citizens have a say in legislation, Ugandans often learn of new taxes only upon implementation. This lack of transparency underscores the need for change as elections approach.

Firstly, it is important to understand the current tax rates in these three countries. According to the World Bank's latest data, Uganda has the highest tax rate among the three countries, with a total tax rate of 53.5%. This includes profit tax, labor tax, and mandatory social contributions. On the other hand, Kenya's tax rate stands at 44.8%, while Tanzania's is at 39.8%. It is evident that Uganda has the highest tax rate, which could be a possible reason for the recent traders' protest.

The traders' protest in Uganda was sparked by the introduction of the Electronic Fiscal Receipting and Invoicing System (EFRIS), a mandatory electronic invoicing system for businesses. This new system aims to curb tax evasion and increase tax compliance by monitoring and tracking transactions in real-time. However, many small business owners argue that the costs of implementing and maintaining this system are too high for them to bear.

Comparatively, Kenya and Tanzania have also implemented similar electronic systems, but the costs for businesses are significantly lower. Kenya's Electronic Tax Register (ETR) system, which was introduced in 2005, has recorded a significant increase in tax compliance and has been relatively successful in curbing tax evasion. Tanzania has also implemented a similar system, the Electronic Fiscal Device (EFD), which has shown impressive results in increasing tax revenue and compliance. It is worth noting that both Kenya and Tanzania have lower tax rates than Uganda, making it more feasible for businesses to bear the costs of these electronic systems. 

Comparing the tax systems in Uganda, Kenya, and Tanzania, it is quite evident that our neighbors have a more involved and participatory approach when it comes to taxes. In Kenya and Tanzania, the taxpayers are involved in the law-making process and have a voice in the taxes imposed on them. However, in Uganda, the tax payers only receive information about the new taxes when they are implemented, leaving them with no say in the matter. This lack of transparency and involvement of the taxpayers is a major cause of frustration and dissatisfaction among the citizens.

It is a shame to see that ordinary citizens are bearing the brunt of high taxes while the tax base remains small. Majority of investors in the country are tax holders, and the burden of covering lost taxes often falls on the shoulders of the local people. This perpetuates a cycle of poverty and economic instability. It is time for the government to expand the tax base and ensure that everyone is contributing their fair share. In the East African community, taxes in Uganda are among the highest, while in neighboring countries they are significantly low which Uganda less competitive in the regional market and hinders economic growth. It is no wonder that strikes and protests are a common occurrence in Uganda, as people struggle to make ends meet in the face of high taxes. The recent strike has resulted in the loss of millions in tax revenue for the country, affecting not only Uganda but also the entire region. The frequency of strikes, whether it's teachers, doctors, or business owners, also highlights the need for a more comprehensive solution from the government.

It is a sad reality that we, as Ugandans, have to pay higher taxes compared to our East African neighbors. This not only affects our individual businesses and livelihoods, but it also has a ripple effect on the region as a whole. With most businesses in neighboring countries paying lower taxes, it becomes a disadvantage for Uganda to attract foreign investors and compete in the regional market. This further affects our economy and development as a nation. During election, we often see people running for political office promising basic necessities such as a kilo of sugar and a bar of soap, without considering the qualifications and capabilities of these candidates to hold public office.

The current state of taxation in Uganda has highlights the need for a change in our leadership and tax policies. President Museveni who has been in power for decades, it’s also a factor that can’t be ignored, and it is clear that change is needed in the leadership of the country. However, simply removing the president alone will not solve the problem. We need to look beyond the presidential elections and focus on electing members of parliament with the necessary qualifications and integrity to make effective laws and policies that will benefit the citizens, rather than their own personal interests. As a landlocked country who heavily relies on trade with our neighboring countries, it is vital that we align our tax policies with those of the East African community to ensure our competitiveness in the regional market. It is time for the government to listen to the voice of the people and work towards creating a fair and effective tax system that will benefit both the citizens and the country as a whole.