Government says the new import duty on garments is meant to protect local manufacturers. PHOTO/COURTESY

Kampala city traders have threatened to close their shops effective September 1, 2021 should the government not consider their request to lower the import duty tax on garments.

The traders under Kampala City Traders Association (KACITA) said the new policy, which pushed the import duty tax on garments from 25 to 35 percent or US$ 3.5 per kilogramme, is pushing them out of business.

KACITA spokesperson Issa Ssekitto on Monday said that due to the new tax policy, a 20 feet container that they would clear at between Shs80m and Shs100m now costs between Shs280m and Shs300 million.

KACITA also asked the government to maintain the 25 per cent levy for both goods brought in before and after the new tax policy implementation to allow members clear goods based on transaction as opposed to weights (kilogrammes) implemented under the new tax measures.

He noted that the tax contravenes the external common tariff agreed upon under the East African Community.

“Many of our members who had put their goods on the high sea were simply ambushed and forced to comply and this is why they have not cleared their goods hence filling up warehouses,” Ssekitto  said.

Ssekito also noted that the new tax even breaches the general agreement on tariffs and GATT valuation under the World Trade Organisation, which requires subjecting of all members to transactional value.

He noted that although the new tax measures are meant to protect local industries in the spirit of Buy Uganda Build Uganda [BUBU], goods should be made available with sufficient capacities to meet the market demand with standards required to match the global market for a favourable competition internationally.

“It is also sad to note that the current manufacturing capacity in Uganda only serves 3% of the market demand and most imported garments cannot be manufactured locally,” he argued.

Thadeus Musoke, the newly appointed KACITA chairperson, appealed to the government to revisit the policy like other East African countries.