Education, tourism service providers will not pay taxes until next year

Kampala, Uganda | THE INDEPENDENT | Payment of taxes by institutions providing education, tourism and agricultural services will be halted until December 31, 2020. The decision is part of the new Tax Procedures Code Amendment Bill, which was passed this evening by the Parliament.

Under the Bill, the government sought to defer payment of income tax for companies and other persons involved in the business of manufacturing, tourism and floriculture, whose turnover is less than 500 million Shillings. It also sought to defer payment of tax on employment income and waive interest on tax arrears.

However, as the bill was being considered, Parliament’s Finance Committee Chairperson Henry Musasizi recommended that the provision also includes the education sector which is still partially closed due to the COVID-19 pandemic. Musasizi says that the considered sectors are the most hit by the COVID-19 pandemic and that the incentive will ease their cashflow during the period so that they can remain afloat.

MPs from across the political divide adopted the recommendations. But Erute South MP Jonathan Odur together with Budadiri West MP Nathan Nandala Mafabi suggested that the deadline for tax deferral be shifted to December 31, 2020. Initially, the government had suggested that the relief starts on April 1, 2020 and lasts until September 30, 2020.

Nandala says that the extension of this until December 31 was appropriate since parliament was considering the Bill way after the initial suggested date.

Since its first COVID-19 positive case registered in March, Uganda has to-date reported 10,933 positive cases out of which, 7,154 have recovered while 98 people have died.

“This will not only provide the much-needed relief to individual taxpayers but will also offset the financial loss suffered and compensate for the earnings lost during the lockdown,” said Musasizi.

Meanwhile, Parliament also approved a government proposal to waive interest on tax arrears that are unpaid by 30, June 2020 by all taxpayers as well as penalties.

“This will provide a stimulus to taxpayers and the the economy as a result of the COVID-19 pandemic outcomes and also clean up Uganda Revenue Authority (URA) books because they have a lot of arrears which they are finding difficult to collect because the penalties and interest in most cases is much higher than the principal amount,” said Musasizi.

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