Political tensions are building in Uganda, as businesses oppose a new electronic-based tax collection system.

Businesses in the capital Kampala and other cities have been closed since Tuesday to protest the deployment of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS).

The sit-in has been set for five days, but it is expected to last longer.

EFRIS monitors transactions in real-time.

The government mandated the use of electronic financial devices and e-invoicing on corporate transaction systems, which the Uganda Revenue Authority (URA) says will help speed tax collection and improve transaction transparency.

Non-compliant traders face fines of up to Sh6 million (US$1,575).

Businesses contend that they are already feeling the effects of the 18% value added tax (VAT).

Some firms are also concerned about URA's imposed requirement of Sh150 million (more than $39 000) in annual turnover for EFRIS deployment.

They are seeking to meet with President Yoweri Museveni to discuss their issues.

In the midst of the standoff, police have been stationed in Kampala's city core to prevent protests.

Trade unions, civil society organizations, and opposition members have all expressed support for the traders.

Ibrahim Bbossa, URA's assistant commissioner for public and corporate relations, has justified EFRIS.

“People have to divorce themselves from the fact that EFRIS is a tax but a system meant to ease business transactions. It supports taxpayers in managing stock, purchases and eases returns filing,” he said.

Amos Lugoloobi, minister of state for finance, planning, and economic development, informed the House on Thursday that the ministry and companies had reached a deal to allow the latter to open their stores.

However, the opposition politician, Allan Sebunya, denied this as unreal.

"According to the traders, the government has not reached an agreement with them. As a result, the strike will remain in effect until they meet with President Museveni,” according to Sebunya.