Denis Jjjuuko – Prime Time Communications

Out to Lunch

#OutToLunch VAT should be paid after cash received policy should be extend to all sectors

#OutToLunch VAT should be paid after cash received policy should be extend to all sectors By Denis Jjuuko There is a story that didn’t make newspaper headlines or even trend online but very crucial for small and medium enterprises or as we have learnt over the last few weeks even for ‘big’ businessmen. The story, published by Daily Monitor in its business pages reads that “goods (and I believe services) supplied to government will, beginning July 1, not be subjected to value added tax (VAT) before their invoices are cashed.” It added that “the policy shift is contained in the new tax amendments 2022 that were passed by Parliament but still awaiting to be signed by the president.” I hope the president doesn’t even take a day to sign this into law. I am not sure why this didn’t make the main headline or at least be on the front page but as somebody who has never edited any newspaper, I would certainly never know. The way VAT has been collected is prohibitive and deters growth for especially SMEs which are the heartbeat of the economy, any economy anywhere in the world. Currently, the Uganda Revenue Authority expects you to pay VAT at the point of delivery, invoicing or payment. This has been problematic for SMEs because you have been expected to pay money you aren’t sure you will ever receive. Usually, upon signing of a contract or receiving the purchase order, government expects you to deliver and then invoice even though there are some cases where a certain small percentage is processed upon signing the contract or receiving the purchase order. In many cases, even where a percentage is paid, it isn’t enough to deliver the goods or services. So in order to deliver on your side of the contract, you approach the bank or informal money lender for a loan at huge interest after which you start the protracted game of chasing payment from government. The promised working days before your payment is processed can turn into months and sometimes years. But within 15 days of invoicing, URA has been expecting you to pay failure of which they would institute penalties. So as a businessman who is already in debt, you take on more debt to pay URA the VAT. This can easily make you a bad debtor and have your assets advertised for auction. The move to demand VAT after somebody has been paid is a good move. One doesn’t have to take on unsustainable debt to pay VAT to avoid penalties or even closure of your account. Money can be paid whenever government pays. At least this doesn’t tie up capital to do some other work as one waits for government payment. Though for many smaller businesses, the tax amendments would have made more sense if the amended law included other businesses. Although the issue of delayed payments is more rampant with government, it is also endemic in non-government organisations and the private sector. Many times, people who are supposed to pay don’t do anything to ensure suppliers are paid on time even when for the case of NGOs money is idly lying on their account. It could be due to lack of understanding and appreciating the pressures in the private sector or simply a bureaucratic system. Many times paper invoices are deliberately misplaced or supporting documents are kept away. An officer goes on leave or decides to attend a workshop for weeks without assigning anyone else to handle their work thereby further delaying payments. This is one of the reasons government owes suppliers an estimated Shs2 trillion some of which hasn’t been paid in five years. Imagine as a small and medium enterprise having your invoices unpaid for five years! Litigation is costly for SMEs and it can also take many years as the case is assigned one judge after another who keep on adjourning it for extended period of time. As a businessperson, you sometimes return to prayer or unsustainable debt which curtails growth. Employees will be affected, businesses will close. Government would lose revenue. Now that the issue of when VAT is paid when supplying government is sorted pending the president’s signature, the issue of the 18% need to be worked on as well. In Kenya, VAT is 16%, in South Africa it is at 15% while in Ghana 12.5% and 7.5% in Nigeria. A reduction in the rate in Uganda would also help boost business and incomes especially given the ongoing economic disruptions. The writer is a communication and visibility consultant. djjuuko@gmail.com

October 21, 2022

Out to Lunch

#OutToLunch A generation of smartphone holders who can’t google is a danger to businesses

By Denis Jjuuko One of the most important discoveries of our time, is the internet. A resource that we use today to make our lives better in almost every aspect. It is perhaps the second most important discovery after fire. It has made many things possible. One needs acres of space to exhaust how the internet has made this life possible. From transferring money from one part of the world to another making e-commerce possible and cutting the costs of doing business significantly. But since the creation of the world wide web in the late 1980s, one of the most significant innovations has been the ability for people to search for information. In the modern era, search engines have been perfected to provide us with all the information we need on almost anything. People’s needs whether looking for information for academic research or buying some sweet corn, search engines provide this information at our finger tips. This is what has made Google a powerful tool and turned its parent company, Alphabet, the world unicorn that it is. Needless to say, that its founders have turned out as some of the wealthiest people in the world. Google with all its powerful algorithms doesn’t charge its users for search fees. All you need is an internet connection and bingo! Of course, you must have the ability to discern what is correct and what is not because search engines simply index information from millions of websites including fake ones. Of course, there is some effort to remove certain sites like those that promote terrorism from these search engines but largely any form of information you need is there. We live in the era of the smartphone, another very important tool that enables anyone to publish news whether fake or not. However, the most worrying trend in Uganda is the inability of diploma and degree holders to search for information to make right decisions. Sometimes a PhD holder in Uganda and a cart pusher peddle the same information without any ability to determine whether the news is fake or not. This is one of the reasons we in Uganda are poor — the inability to discern the information that the internet throws our way. Many Ugandans are easily conned by 419 scammers who promise them to have won lotteries they have never registered to participate in. Others lose money through pyramid scams that have been written about in other countries. This is a result of mainly our inability to search for the right information. If our businesses must grow and survive, we must fully understand the search element of the internet. Searching for opportunities and understanding the partners that we want to do business with. But if we can’t ascertain a business opportunity from a scam, we won’t be able to grow. Search engines can lead us to opportunities including new innovations. But do we know how to find this information? To separate it from the genuine and the one that isn’t so? When you look at how quickly Ugandans take in to conspiracy theories which all of them can be easily debunked through search, then you know that our businesses are in trouble. It may sound weird but our syllabuses at a certain education level should teach people how to search for the right information and perhaps that will help people make critical decisions based on the right information. Based on the information highly educated people spew on social media platforms, it is rightly possible that they are making decisions in their workplaces based on unverifiable information. This is going to make many businesses lose money. If a well facilitated highly educated employee who has access to internet cannot use search engines to verify information or even make a few calls but simply tweets whatever comes their way, how are they making decisions for the business? In Whatsapp groups of university graduates is where most misinformation is shared by people in critical managerial positions. How are these people managing the people below them? How can a university graduate with 20-30 years of working experience be so reliant on information that they can’t verify when they own a smartphone with data? Business owners and those at the highest levels must deliberately find ways to empower their workers so that they make decisions based on the right information. If you see somebody in a workplace Whatsapp group sharing all the fake news, know that they are making wrong decisions for the business. The writer is a communication and visibility consultant. djjuuko@gmail.com

August 23, 2021