The ongoing saga surrounding the implementation of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) in Kampala took a new turn on Tuesday as the Uganda Revenue Authority (URA) addressed concerns raised by the business community regarding the system.

What initially started as a strike by traders in Kampala on Monday morning against EFRIS and the 18% Value Added Tax (VAT) levied on every commodity purchased by customers ended with many traders reopening their stores for business. The traders had initially closed shop, protesting what they perceived as burdensome taxation practices enforced by the government.

In response to the traders' grievances, the URA released a statement emphasizing that EFRIS is not a tax itself but a system designed to ensure accurate computation of costs and expenses by businesses required to pay VAT. The URA pointed out that businesses with an annual turnover of UGX 150 million are mandated to register for VAT.

“EFRIS enhances record-keeping, streamlines tax filing and refunds, promotes fair taxation and reduces revenue leakages, thereby contributing to a more robust tax ecosystem that serves the greater good of society,” the statement from URA’s Assistant Commissioner Public and Corporate Affairs Ibrahim Kibuuka Bbossa reads.

The statement from the URA comes amidst ongoing tensions between the business community, represented by bodies like the Kampala Capital City Traders Association (KACITA) and the Federation of Uganda Traders Association (FUTA), and the government regarding taxation practices and the adoption of EFRIS.

The URA acknowledged the concerns raised by KACITA and FUTA, highlighting the benefits of EFRIS in promoting transparency, efficiency in VAT collection and remittance, fair taxation, and reducing revenue leakages. The authority also noted the significant efforts made to sensitize and train traders on EFRIS usage, with over 56,000 taxpayers, primarily VAT registered, equipped with the necessary knowledge to integrate EFRIS into their operations.

“Since August 2023, our tax educators have been actively engaging with traders across the [Kampala Central Business District], offering education on EFRIS,” Bbossa says.

Furthermore, recent enforcement measures revealed substantial sales underreporting within the Central Business District (CBD), according to URA, emphasizing the necessity of EFRIS compliance to ensure accurate tax contributions and a level playing field among businesses.

“While we understand that change can be challenging, it is imperative for businesses to adapt to new technological advancements to ensure a level playing field and contribute towards Uganda’s economic prosperity,” the statement reads.

While acknowledging the challenges and resistance faced during the transition to EFRIS, the URA reaffirmed its commitment to supporting businesses and fostering a prosperous and equitable economic environment.