The Independent Uganda: You get the Truth we Pay the Price
Some of the tax policy interventions that will be implemented in the coming financial year 2021/2022 are reforming taxation of rental income to remove the incentive for non-individual rental taxpayers to claim unrestricted deductions which significantly reduce their tax contribution, reduce rates of depreciation for some classes of assets, discontinue the concurrent deduction of initial allowances and depreciation in the first year of use of qualifying assets and others.
The others are reviewing the capital gains tax regime by allowing for the effect of inflation and providing tax relief for venture capital investments, broaden the scope of taxation of plastics to cover all plastics, rationalize the excise duty regime on telecommunication services by scrapping the excise duty on Over the Top -OTT and introduce a harmonized excise duty rate of 12.0% on airtime, value-added services and internet data excluding data for provision of medical services and the provision of education services.
Others are the introduction of an export levy of 7% on the value of fish maw exports, export levy of 5% and 10% on processed and unprocessed gold and other minerals respectively.
However, experts including Sarah Chelangat, the Tax Manager at Ernst & Young Uganda are questioning the intention of government taxing internet at the time it is it needed most.
She said the government should have instead removed taxes on internet to stimulate digital economy that the same government is purported to be in support.
“This is will have an implication on the growth of firms,” she said. Other experts have questioned the rationale for taxing data at the time the government is investing in expanding the internet access across the country to facilitate online transactions and thus fasten service delivery to the citizens.
Tax administration measures
Lugoloobi told MPs that Uganda Revenue Authority- URA will implement administrative interventions to boost revenue collection by among others strengthening tax arrears management and recovery, enhance data analysis through interfaces with other government information systems to enhance taxpayer compliance, enforce tax compliance using the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) and Digital Tax Stamps.
The others are enforcing enhanced licensing requirements for clearing and tax agents, and bond operators, improve detection of smugglers using non-intrusive inspection equipment, and close all bonded houses for imported sugar for re-export to avoid undeclaration and misclassification.
“These administrative measures will generate about Shs 800bn in revenue collections, and the capacity of local governments to collect revenue will be enhanced through training and ICT infrastructure,” Lugoloobi added.
Budgets in EAC countries
Beyond the Ugandan borders, Kenya and Tanzania also presented their budgets on June.10 as per the East Africa Community (EAC) Treaty in which partner states are required to read their budgets simultaneously.
However, Burundi whose financial calendar begins in January and South Sudan were both given time by the EAC Council of Ministers to adjust the reading of their budgets in harmony with the rest of the partner states. Rwanda did not give reason for delaying the budget reading, according to The EastAfrican.
In their budgets, Kenyan plans to spend US$19.46 while Tanzania plans to spend US$15.6bn in the next financial year.
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