Kenya-Uganda Trade Tensions Escalate Over Tax Dispute

Kenya and Uganda are bracing for renewed trade tensions following Kampala’s decision to raise taxes on Kenyan produce by Ksh3 per kilogramme.

Kenyan exporters of Irish Potatoes to Uganda find themselves stranded at the border, unprepared for the newly imposed levies.

According to Uganda’s Daily Monitor, the country’s revenue authority stated that the previous valuation of the product was deemed inadequate, prompting a revision in taxation.

“We have revised and augmented the withholding tax on Irish potatoes entering the country,” the paper quoted the Uganda Revenue Authority.

The recent development has resulted in over 30 Kenyan trucks stranded at the Busia border customs, while others, having crossed without paying the revised tax, are being detained in Jinja, a town in eastern Uganda.

Haji Ali Mande, chairman of the Uganda Clearing Agents and Forwarding Association in Jinja, criticised the swift and substantial implementation of the tax, citing it as burdensome for importers.

This escalation is expected to exacerbate the existing trade tensions, which have previously seen Kenya impose restrictions on certain Ugandan goods, particularly dairy products.

These actions run counter to the principles of the East African Community Customs Union, which mandates free trade among member states.

Last year, Uganda filed a case against Kenya at the East African Court of Justice after Nairobi denied a license for its government-owned oil marketer, the Uganda National Oil Corporation (UNOC), to operate locally and manage fuel imports destined for Kampala.

In November, Kenya declined to grant UNOC a local oil marketer license, prompting Uganda to take the matter to the regional court last month, seeking Kenya’s approval for the operation.

Uganda alleges that Kenya reneged on a commitment made in April of the previous year to support Kampala’s independent fuel imports, starting from the present month.