What are the biggest challenges in retail post-COVID-19?
Most retail businesses were closed during lockdown and had to evolve online. Businesses were forced to restructure on the employment side. Employees had to shift and start working from home.
What are the opportunities or support for retailers from a policy standpoint?
There are issues with regulation regarding consumer protection and fair competition that were exacerbated by COVID. There is also a lack of antitrust laws. Consumer protection is needed with the shift to online to guarantee quality. A lot of data is going to be shared – how is this data going to be protected? There needs to be regulation of online businesses as they shift to digital.
What is your advice on taxation policies in the online retail space?
URA is a 30% ‘shareholder’ in all businesses. The best way of tax avoidance is compliance. There has been a voluntary disclosure drive from the URA for those who haven’t been complying to pay the balance and not the fines. Signum Advocates has advocated for total tax amnesty to help businesses. Tax laws may be stringent, but the government needs the revenue to operate.
URA has introduced various technology-based tax administration measures such as e-invoicing (EFRIS). Some big players have insinuated it is likely to be unfair to them, especially if the relatively smaller players are not onboarded too, what is your view on this? How can the government help businesses to go online?
EFRIS is an innovative system that will catch people who have not been complying with their tax obligations. Every transaction will be recorded especially for the big players.
There are a lot of international cross border businesses that have not been paying their fair share of tax. For example, how can we protect Multichoice from Netflix, which is not paying taxes here? Government can institute a direct service tax as per the number of registered users for their service and create a legal platform that incentivises businesses to set up online. There needs to be sensitisation of masses that fear online fraud and regulation that protects the consumer.
Are there opportunities for digital disruption within the legal field?
Customers are more demanding on quality and the understanding of their businesses. They are not interested in legalese. Evolution comes from the lawyer being part of the business. There are now online sessions for court and client meetings are now happening online. You should know what the future holds and start acting now, or drown.
Have you observed any surprise in consumer behaviour during Covid-19?
COVID-19 presented the chance for everyone to rethink how they do their business. The need to have as much savings as possible was emphasised and planning for ten years from now. Signum Advocates is engaging our clients on how they can do business better.
What specific support do your clients need to shift post-COVID-19?
Restructuring of client’s facilities and employment restructuring as there is an ongoing shift in businesses from being labour intensive to computer-intensive. The lawyer needs to think smarter on how to support these businesses.
Who are the winners and losers from COVID?
Those who understand and embrace the opportunity presented by the crisis have won. COVID-19 has created rough seas that have shown the real sailors.
Are there financing opportunities for retailers, especially the compliant businesses?
The key to finance is to understand the need and then scope out how to clear the need. Businesses need to thoroughly understand leakages, inflows, expenses and incomes. First of all, businesses need to block leakages and minimise expenses. Income has to come in through the door, and expenses out through the ventilators. When that is understood, then you can get financing. Debt can be broken down as per the needs of the business.
What tax incentives are available for locals and small retail businesses?
Tax benefits and incentives are dependent on the type of business. Buy Uganda Build Uganda (BUBU) policies have to be instituted to protect local businesses. Government needs to think about how to balance foreign investment and keeping local businesses afloat, e.g. protecting furniture made in Uganda by higher importation tax.
Do you think traditional retail is dying? What is the future of retail in the next 5 to 10 years?
No. The number of people who consume online retail in Uganda are still low. Although there has been a shift, credit and trust issues have hampered online retail. With online shops, you still need warehousing. More warehousing will come up with online retail shops.
Retail business is here to stay but will evolve. Consumerism may reduce as people have realised the need for savings. There will be a blend of online and traditional retail. With regards to tax, the government will force tax compliance, thereby increasing the tax base.