Private sector tasks gov’t to improve tax policies

Kampala, Uganda | THE INDEPENDENT | Uganda’s private sector has blamed the poor attitude towards compliance with tax obligations on what they call unfriendly tax policies.

This comes as the government seeks more ways of encouraging more Ugandans to pay taxes as and when they fall due, and also increasing the tax base.

At about 27 trillion shillings a year, this revenue is just about 13 percent of the value of the economy (GDP) and one of the lowest ratios in the world, according to the International Monetary Fund.

Susan Muhwezi, the chairperson Uganda Hotel Owners Association (UHOA) says the most discouraging aspect is the very low level of accountability for the taxes that Ugandans pay.

“The Ministry of Finance and URA have a feeling that we don’t want to pay taxes, yet we are very willing as long as we know what our taxes are doing and that there is value for money,” Ms Muhwezi said.

She was speaking ahead of the September 4 conference on tax measures organized by the Ministry of Finance, Planning and Economic Development, Uganda Revenue Authority and the Private Sector Foundation Uganda.

The conference aims to understand and respond to the challenges that affect local investments, to boost local investments and job creation, among others.

On the taxes, Muhwezi cited the 27 different taxes and licenses that a hotel investor has to pay saying the processes are tedious and expensive.

“Imagine moving from place to place to look for the 27 persons or offices before you start implementing your project!,” she said questioning why these requirements cannot be consolidated into one package.

“I know how much taxes I am supposed to pay, but please, harmonise the policies. Initially, we signed a Memorandum of Understanding with URA after we’ve confirmed to them that this is a proper hotelier. But then they ask for 27 taxes and licenses!”

She says there are currently 3,000 hotels and related investments in Uganda, but that only 700 are registered with UHOA with the majority fearing that registration would expose them to government agencies, especially URA.

Evelyn Anite, the State Minister for Finance (Investments) said she supports collapsing all the 27 obligations for hotel investors, and any other similar ones, into one package to make it easy for the investors.

The conference will attract government agencies responsible for investment promotion, the private sector association and their registered members, among others.

It is aimed at reviewing the current tax framework and its role in driving economic progress, and also explaining the tax incentives available for the local investors, so that they are encouraged to invest at home.

“Some Ugandans with money are starting to invest in other countries, but we want to encourage them to put their money here and create jobs for the country,” said Anite, adding, “So before investing a lot in attracting foreign investors, can we first attract the Ugandans to invest at home?”

There will also be responses on sticky issues raised by the business community, including the Digital Tax Stamp and the online tax assessment and payment system (EFRIS), which the investors are finding bothersome.

Sarah Chelangat, the Commissioner of Customs at Uganda Revenue Authority urges the business community to turn up and understand what opportunities the government provides for them, including tax incentives which are otherwise thought to be only for foreigners.

“There is a special package of incentives for local investors including the 10-year tax holiday and exemptions in VAT, Excise Duty and Stamp Duty on strategic sectors,” she said.

URA will also be sensitising the business community on how to access these incentives.

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