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Kampala, Uganda | THE INDEPENDENT | The Secretary to Treasury, Ramathan Ggoobi, has told MPs that the Ministry of Finance is in the process of streamlining tax incentives to ensure their effective implementation.
Ggoobi was on Thursday appearing before Parliament’s Finance Committee together with the Minister of State for Planning, Amos Lugoloobi, over Uganda Tax Expenditures Report for financial year 2020/2021 to 2021/2022.
In his statement, Ggoobi said that government is implementing a Tax Expenditure Rationalisation Plan to streamline tax incentives over the medium term.
He said that his ministry was aware of weaknesses that they have been having in regard to managing tax expenditures and that they have now put in place a tax expenditure rationalization plan with the help of development partners like the International Monetary Fund (IMF).
Ggoobi told MPs that the tax expenditure rationalisation plan will involve a criteria of choosing beneficiaries, purpose of the tax incentive, time frame and clauses indicating obligations of investors who intend to benefit.
He further said that the plan will also help in cost-benefit analysis and that government shall be able to tell the number and nature of jobs provided through the different tax incentives, and contribute to the country’s import substitution strategy.
In the coming financial year 2023/2024, government proposes to review the tax expenditures on capital incomes, unify tax rate on capital income, and review exemptions on supplies of some machinery, tools, and input suitable for use in agriculture. However, Ggoobi noted that the tax expenditure rationalization plan is not to stop tax incentives, but rather ensure that they are effective and beneficial.
Amos Lugoloobi, the Minister of State for Planning said that key objectives of the Domestic Revenue Mobilisation Strategy have been met since government introduced tax incentives in the 1990s. He pointed out the reduced importation of products, employment, and increase in locally manufactured products as some of the benefits.
This was after Keefa Kiwanuka, the Finance Committee chairperson asked for evidence of benefits that the country has achieved as a result of tax incentives. Jane Pacuto, the committee vice chairperson said that the rationalization plan is a move in the right direction, but asked the Ministry of Finance to tighten the grip on investors who receive incentives but do not show tangible results.
On several occasions, Members of Parliament have raised concern over the increasing tax and appealed for a legal review and evaluation of the beneficiaries.
For the last three financial years, Government has forgone revenue totaling 11.7 trillion Shillings on tax incentives.
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