President Yoweri Museveni of Uganda.

President Yoweri Museveni of Uganda halted the contentious newly implemented electronic-based tax collection system.

Museveni issued the instruction to suspend the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) during a meeting with traders at State House Entebbe.

Traders led by the Federation of Uganda Traders Association (FUTA) and Kampala City Traders Association (KACITA) went on strike in mid-April to protest the EFRIS' implementation.

On Friday, Museveni met with a group of 61 members led by FUTA chairman John Kabanda and KACITA counterpart Musoke Nagenda at State House in Entebbe.

The State House reported that traders in East Africa's third largest economy have agreed to resume their operations following consultations with the president of state.

During the discussion, Museveni informed the traders that he will meet with officials from the Ministry of Finance, Planning, and Economic Development and the Uganda Revenue Authority (URA) on Wednesday for further consultations on the problem.

Further negotiations over the contentious tax reforms are set for May 7. The period between now and May 7 is meant to make the changeover easier for all traders who require more time to adjust, while allowing those who have already adopted the system to continue without interruption.

URA argues EFRIS is designed to reduce tax avoidance by businesses by monitoring transactions in real time.

It requires enterprises to implement electronic fiscal devices and e-invoicing on their business transaction systems.

Non-compliant traders face fines of up to Sh6 million (US$1,575), although Museveni has asked URA to defer penalties to allow for wider consultations.

Businesses have criticised EFRIS, citing the 18% value added tax that they are already liable to.