29 October 2012

Uganda: Taxes Hinder Rwanda Cross Border Trade

Kigali, Rwanda — High taxes are some of the challenges that are holding back informal cross border trade, which is looked at to boost regional trade.

According to a report by International Alert, an independent peace building organization, high taxes on especially on Rwandan side constitutes to regional trade barriers and a major difficulty for small cross border traders.

"Most taxes paid in Bugarama are not export taxes but rather market taxes and to a lesser extent municipal taxes which are a bit higher in the region," Pacifique Borauzima, Buluhukiro, regional head of project for International Alert said.

The report indicates that Rwandan taxes are the highest where each instance of formal taxation costs US$ 2.37.

Informal taxes are US$ 1.89 at Cyangugu border, with Bugarama figures going to US$1.47 for formal taxes while informal taxes are at US$0.83.

Again, percentage of formal taxation is higher on the Cibitoke, Burundian side of the border while in Bukavu in Congo , the amount of taxation is considered to be lower but with large numbers of taxes still a challenges to most traders.

Speaking on the report titled "Walking in the dark: informal cross border trade," in the great lakes region, Buluhukiro said most cross border traders especially women are not aware of tax regimes that are applied in across borders in the region.

"The main problem, then is not that traders refuse outright to pay their taxes, but that across the region they are not aware of the taxation rates being applied," he said

The report carried out by International Alert in partnership with UN Women aims at strengthening the business environment for women working as small traders in order to improve their chances of economic survival.

Nevertheless, traders say Burundi and Congo borders pose a big threat to cross border traders with many informal taxes, harassment and confiscation of trade goods.

For instance, the report shows that informal taxation is widespread in Burundi with informal taxes higher than formal taxes at Gatumba border while the value of informal is higher on Burundi's Cibitoke and Gatumba border posts.

" We are making losses through these taxes and confiscation of our goods by border authorities and even you pay taxes they don't give you a receipt which makes you pay many times," Leonia Nsekerabarndya, a woman cross border trader from Burundi said.

The report further indicates that despite taxation, cross border traders mainly women don't have access to finance, improper infrastructure, low levels of educations among others.

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