Experts have urged owners of informal businesses to register and formalise them (businesses), if they are to tap in the enormous opportunities.
Speaking at the Uganda Revenue Authority’s (URA), e-bomba ya business summit held under the theme: “Business Formalisation and inclusive resource mobilization for Uganda’s economic independence”, the Commissioner General URA, John Musinguzi, called on businesses in the informal sector to register, and formalise if they need to be supported, and grow without facing unnecessary obstacles.
Musinguzi said that, infomal businesses will always find it hard to access loans, government incentives and opportunities, since they are formally not recognised.
He explained that formalisation is getting one’s business registered, keeping records right and paying the right taxes.
Musinguzi noted that many local businesses in the country have missed out on opportunities because they fear to be formal.
He revealed that most of the opportunities are scooped by multinationals who have formalised their businesses.
“Once your business is registered, you are assured of opportunities, partnerships and trust, because we don’t want to register, these multinationals have taken almost all opportunities coming into the country,” he said.
Musinguzi added, “You can register and get a Tax Identification Number, online without being asked too many questions. In principle, we are together in this let’s encourage businesses to formalise and support them to grow.”
He dismissed fears of businesses being taxed, saying these will only contribute tax when they have grown and are making profits.
“URA is committed to nurturing your business to grow. Taxation should happen only when the business is earning income,” Musinguzi said.
Speaking at the same event, Francis Kisirinya, the Acting Executive Director, Private Sector Foundation Uganda (PSFU) noted that informal businesses take long to grow.
“I have seen businesses which operate for years and fail to develop, they eventually fall because they’ve continued to operate informally. When you’re not registered, people cannot trust doing business with you. Everyone thinks that you are the one that deals in counterfeit goods,” said Kisirinya.
Kisirinya said that some informal businesses, end up paying extra bills which they would not have paid if they were registered.
“For a person running a business informally, you might end up paying bills which you would not have paid if you were registered,” he said.
Rosemary Mutyabule, the director Business Advisory and Consultancy Services at Enterprise Uganda revealed that there are more benefits of running formal businesses, saying formality is aa stepping stone to bigger things.
She however noted that government, and citizens hold the obligation to support the informal businesses to grow and later formalize.
Mutyabule noted that reasons to why some businesses have kept informal, is the perception, mindset and fear of paying taxes.
She asked URA, to sensitize business owners on the benefits of paying taxes, and formalisation of businesses.
Constance Kakihembo the Executive Director, Uganda Women Entrepreneurs Association Limited (UWEAL), noted that most businesses started in the informal sector but what helped them grow and keep afloat was formalization.
Kakihembo noted that at UWEAL, they have tried to sensitize women in businesses on the benefits of formalization.