KAMPALA – Ugandans exporting goods to South Sudan are losing billions of shillings in taxes due to a failure by regional countries to ratify the Double Taxation Agreement (DTA).
The agreement is expected to lower taxes and increase cross-border investments.
Speaking at a press conference held at the Morocco Consulate in Kololo, Hon. Dr. Abraham Maliet Mamer, Secretary General, South Sudan Investment Authority, who came to Uganda for the two-day West Nile Investment Symposium 2019 said that ratifying the agreement could save companies millions of dollars in tax and additionally provide greater incentives for cross-border investments.
He said that for investors, being taxed in two jurisdictions — their home country (Uganda) and the country in which a fund ultimately invests (South Sudan) — it is a big turn-off.
“It is our expectation that implementation of this agreement will increase cross-border businesses and investment — which, in the long run, will even increase employment as well as domestic revenue,” said Dr. Maliet Mamer.
He said that South Sudan government seeks to negotiate tax treaties with Uganda which is a major trading partner to avoid cross-border investors being taxed twice on their income and to maximise investment between them.
“Because of the relationship we have [Uganda and south Sudan]; there are no reasons why our people are paying double taxes. In the final of all of these, the burden is passed on to consumers,” he said adding that “we need to look into it.”
He said the businessmen should be taxed once “and then we seat and devise mechanisms to share the funds among ourselves.”
“The food we’re getting from Uganda is costly in South Sudan. I went to the factory yesterday and a tile here costs only 5cents of a dollar but in south Sudan it goes to up to 6 dollars. Now that 6 dollars is not being paid by the businessman, it is us the consumers who feels the burden.” He noted.
He emphised that avoidance of double taxes is a mechanism governments should revise to release the pressure on the consumers.
Government officials who spoke to PML Daily revealed that delays in the ratification process encountered between Uganda’s Foreign Affairs Ministry, Finance Ministry and parliament have held back endorsement of the EAC DTA in recent months with limited hopes of a breakthrough during the current financial year.
Officials also revealed that the delay in ratifying the tax protocol has forced businesses in the region to spend time and money on creating complex financial structures, often involving holding companies in countries with bilateral tax agreements.
Meanwhile, Ugandan traders have started returning to South Sudan a year after they were evacuated by Uganda People’s Defence Forces (UPDF).
This followed fighting between forces loyal to President Salva Kiir and former vice president Riek Machar.
Most Ugandan traders are now residing in Rajaf County in Juba, the capital of South Sudan, Gondokoro County and Aruu County.
Some of the traders who talked to PML Daily said they returned to a risky country because they couldn’t cope with the economic condition in Uganda.
Traders had also complained that the cost of transporting agricultural products from Uganda to South Sudan is too high in terms of security, fuel prices and taxes.
The South Sudanese government has also promised to give land to Ugandans who want to deal in agriculture.
Dr. Maliet Mamer said they are currently sorting out problems Ugandans are encountering while transporting goods on Kampala-Elegu road on Ugandan side and Nimule-Juba Road on South Sudan side.
Traders had complained about corruption, double taxation and insecurity along Nimule-Juba road.
He urged traders to work with the security agencies so as to remain peaceful in South Sudan.
An estimated 20,000 Ugandans are already back in Juba and other areas in South Sudan.