Gov’t Direct Tax On Coffee Stirs Controversy

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The government’s decision to directly charge coffee factories has upset coffee processors in Bukomansimbi district, who say it is likely going to force them out of business.

In the 2018/19 budget framework, the government introduced a one percent direct tax on coffee buyers and processors as one of the ways of ensuring inclusive tax contribution by all Ugandans.

The levy categorized as Value added tax is perceived as inconsiderate and rough by the members of Bukomansimbi Coffee Processors Cooperative Society who now want the government to reconsider it to save their businesses from collapsing.

Joseph Mbaziira, the Chairperson of Bukomansimbi Coffee Processors Cooperative Society, says that they are afraid that many coffee factories are likely to close shops because of the high costs they incur in the production processes.

He says that although the government didn’t enforce the tax immediately, they have lately received invoices requiring each coffee factory in the area to pay sh5 million to Uganda Revenue Authority-URA as a direct tax.

Mbaziira explains that the coffee dealers already pay several taxes and utility expenses, arguing that it is improper for the government to subject their businesses to an additional levy.

Vincent Ggaliwango and John Mary Lyazi are both coffee processors in Bukomansimbi district. They note that besides the tax being inappropriate, the demand notices were issued without any assessment to establish the incomes of each processing factory.

These have blamed the government for primarily looking at collecting taxes from their businesses, without creating for them a conducive environment within which they can operate.  According to Ggaliwango, many processing factories in the area are operating with huge bank loans, saying that subjecting them to any additional tax will force them out of business.

The coffee processors are considering petitioning parliament and the Ministry of Agriculture, to express their grievance against the tax with threats of closing their businesses in protest. Ibrahim Bbosa, the Assistant Commissioner of Public and Corporate Affairs at URA told URN he needed time to study the complaints raised by the processors.

Fred Bwino Kyakulaga, the State Minister in Charge of Agriculture has appealed to the coffee processors to remain calm, saying that their concern was presented to the cabinet, which will soon come up with a position to guide on the next course of action.

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