The issue of over taxation has dealt a severe blow to the Ugandan fish maw trading industry, forcing many traders out of the market.
Fish maw traders petitioned the Parliamentary Committee on Agriculture, Animal Industry and Fisheries on Tuesday over what they have termed as “excessive taxes.”
The traders protested the 8% export duty charged on each consignment of fish maw and USD 11 of import duty imposed on every kilogramme of fish maw. The traders also expressed their concern over the 6% withholding tax levied on each sale of fish maw, and also complained about continued brutality on water bodies by security personnel.
While presenting their petition, the fish maw traders under their umbrella body – the Fish Maw and Traders Association Uganda Limited, said that the excessive taxes have forced them out of the business.
“Initially, our association had more than 50 members who are representing companies, but due to unfavourable government policies, the number has dropped to 30,” said Justus Ssennungi, the chairperson of the association.
Ssennungi said that the sink in numbers has also resulted in a proportional drop in tax revenue.
The association general Secretary, Simon Musana decried a plethora of taxes levied on fish maw traders from the time of fishing, processing and exporting, saying it is “unfair, unrealistic and excessive.”
“Before fish maw is taken to a level of export, there are lots of taxes charged. You cannot move fish maw in any vehicle which is not licenced. We pay annual licence to the ministry, trading licence, and health licence to KCCA, and many others,” he said.
Musana said that the heavy tax burden explains the low fish maw stock on the Ugandan market compared to other East African countries.
A feared effect is the closure of the local fish industries as fishermen prefer to do business in Tanzania or Kenya. Musana said Kenya charges zero tax while Tanzania charges USD 2.6 per kilogram of exported fish maw.
“We have done comparative analysis and you realise Tanzania charges USD 2.69 on each kilogramme of fish maw exported, while in Kenya, there is no tax imposed on export…It is our prayer that export tax is reduced to USD 2.5 per kilogramme,” Musana said.
He also proposed that import duty be reduced from USD 11 to USD 2 per kilogramme and the 6% withholding tax should also be reduced to a manageable level.
Section 30 (a) of the Fish (Amendment) Act, 2021 imposes a levy on fish maw at the rate of 8% of the total value of fish maw which is exported.
It is also the plea of the fish maw traders to harmonise the taxation system, and formulate clear trade treaties and protocols with other trading partners in East Africa.
The Association Chairperson, Justus said, “most of the foreigners especially the Chinese who are having factories here have started going to Tanzania [to do business]. Our children are losing jobs and the country is losing revenue.”
His remarks were reaffirmed by Woman Member of Parliament for Buvuma District, Suzan Nakaziba who said that over taxation has led to a sharp decline in the number of fish maw traders and a significant loss of revenue for the Ugandan economy.
“These people are making losses. In my constituency in Buvuma District, we used to have many, over 50 businessmen dealing in fish maw trade and processing, but currently, I am having like only five,” she said.
Bbaale County MP, Charles Tebandeke said “if one commodity (fish maw) being imported in Kenya levied a tax as import tax, then it is the same quantity being levied withholding tax. After processing and value is added, it is then levied export tax. This is beyond double taxation, but it is triple.”
Fish maw traders did not only decry over taxation, but also difficulty in accessing markets.
Failure to have a direct access to market, they said, has made the situation even worse.
Currently, the fish maws from Uganda are exported to China through Hong Kong.
Sennungi told lawmakers that after Ugandan fish reaches Hong Kong, it is exported to China as Hong Kong products because Uganda does have a fish maw trade agreement with China.
The Committee chairperson, Janet Okori-Moe, mentioned that fishermen are experiencing challenges due to non-implementation of the Fisheries and Aquaculture Act of 2022.
“As a committee, we are planning to do oversight visits to some of the landing sites to confirm the efficiencies of the new Act. But also, we need to follow up on some of the specific regulations that the minister needed to bring to Parliament,” Okori-Moe said.
The issue of over taxation in the Ugandan fish maw trading industry has significant implications for the Ugandan economy.
One of the most immediate implications is the reduction in tax revenue. As fish maw traders are forced out of business, the government is losing out on a significant source of income.
Additionally, Uganda has a comparative advantage in the production of fish maw. This is because the country has a large number of lakes and rivers, which provide a plentiful supply of fish. However, the over taxation of fish maw is eroding Uganda’s comparative advantage in the industry. As a result, Uganda is becoming less competitive in the global fish maw market.
Furthermore, the fish maw industry is a major employer in Uganda, with millions of people directly and indirectly employed in the sector. However, as fish maw traders are forced out of business, many of these jobs are being lost.
To address the pressing issues, the Ugandan government should also take steps to improve market access for fish maw traders. This could include negotiating direct trade agreements with China and other major fish maw importing countries.