Resellers in Uganda are facing a hard knock on their profits and operations as an 18% VAT introduced this financial year on all IT products takes its toll.
Coupled with delays aggravated by stock-outs and little consistency by local distributors, the resellers are finding trouble surviving as Ugandan buyers demand prices equivalent to low prices of computers being sold on Amazon and eBay.
In its annual budget FY 2014-15, Uganda’s ministry of Finance announced that Supply of new computers, desktop printers, computer parts and accessories and computer software licenses will be subject to 18% VAT. Such supplies had previously been exempt from taxation.
“Recently the government of Uganda has put 18% VAT on laptops, desktops and all I.T products. This has brought IT retail business slowdown compared to previous years,” said Sunit Gadhia, the Marketting Manager of Pavan Computers Ltd in Kampala.
Mr. Gadhia was speaking to Channel Post MEA in an interview to be published in our Interviews section.
In the interview, Gadhia said, “Now-a-days all customers including corporate and retail, assume price by simply searching Amazon and eBay and claim that we as retailers eat all the margins. Despite explaining the tax situations to customers we still fail to sell to them in some cases. Many times we also
get bulk corporate orders but then the distributors run out of stock and we fail to supply on time. Consistency and variety of products with channel distributors is limited.”
