Government waives specific duty rate for imported textile and garments fabrics
Uganda Revenue Authority has revealed that through a ministerial directive ref TPD.81/167/04 dated 4th August 2021, textiles and garments which are not manufactured in Uganda and as such cannot be adequately sourced locally have been maintained at an import duty rate of 35%.
These textiles account for 90% of the clearances by the textile and garments traders. However, the textiles and garments that can be sourced locally from Ugandan manufacturers which account for 10% of the imports by the traders will be maintained at the rate of 35% or $3.0 per kilogram for textiles or 35% or USD 3.5% per kilogram for garments as approved by the council of Ministers under Legal the East African Community Gazette Legal Notice No. EAC/118 /2021 dated 30th June 2021.
The Saturday Vision on 28/08/2021 reported that 700 containers of textile/garments are stuck at URA, quoting the Spokesperson of KACITA. A figure that is far from the truth. URA is in possession of 125 containers and so
far, 9 have been cleared due to the new tax regime as pronounced by the Minister of Finance Planning and Economic Development.
The Minister of Finance Planning and Economic Development has waived the specific duty rate of USD 3/3.5 per kg for the 90% of the textile and garments products, therefore these will remain at the 35% rate and as such, there is no increment of the taxes.
The 35% was the tax rate applicable on textile for the Financial Year 2020/2021 and therefore status quo has been maintained.
From the 18th of August 2021 to date, 9 of 125 containers have been cleared out of customs after the implementation of the Ministerial directive that removed the specific duty rate on 90% of the textiles and garments.
This number is expected to grow as more traders realize that the rate has been maintained as it was last financial year.
According tp URA, the products in question are produced in sufficient quantities in Uganda and will help boost manufacturing of the same in the country. Uganda will be able to promote the cotton textile
value chain from cotton growing to the manufacture of fabrics that will be exported after value has been added.
Textiles have proved to be one of the most critical sectors in job creation in Africa. An example is Ethiopia, where the sector employs more than 2.5 Million people, with women accounting for 70 per cent.