Hon. Amos Lugoloobi the newly appointed Minister of State for Planning, has announced new tax measures as Uganda grapples with US$ 17.96 billion public debt.
Tax Policy Interventions
- Accordingly, I will highlight some tax policy interventions which will be implemented in Financial Year 2021/22: –
i. Reform taxation of rental income to remove the incentive for nonindividual rental taxpayers to claim unrestricted deductions which significantly reduce their tax contribution.
ii. Reduce rates of depreciation for some classes of assets.
iii. Discontinue the concurrent deduction of initial allowances and depreciation in the first year of use of qualifying assets.
iv. Review the capital gains tax regime by allowing for the effect of inflation and providing tax relief for venture capital investments.
v. Broaden the scope of taxation of plastics to cover all plastics
vi. 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.
vii. Introduce an export levy of 7% on the value of fish maw exports.
viii. Impose an export levy of 5% and 10% on processed and unprocessed gold and other minerals respectively.
Tax Administration Measures
87.Uganda Revenue Authority will implement administrative interventions to boost revenue collection including the following:-
i. Strengthen tax arrears management and recovery;
ii. Enhance data analysis through interfaces with other Government information systems to enhance taxpayer compliance;
iii. Enforce tax compliance using the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) and Digital Tax Stamps;
iv. Enforce enhanced licensing requirements for clearing and tax agents, and bond operators;
v. improve detection of smugglers using non-intrusive inspection equipment, and
vi. Close all bonded houses for imported sugar for re-export to avoid undeclaration and misclassification
- These administrative measures will generate about Shs. 800 billion in revenue collections.
89.Mr. Speaker, the capacity of local governments to collect revenue will be enhanced through training and ICT infrastructure.
Public Debt Sustainability
90.Mr. Speaker, Uganda’s debt amounted to US$ 17.96 billion as at 31st December 2020, equivalent to 49.8% of GDP. Borrowed funds have been used to finance mainly infrastructure projects such as the Karuma and Isimba hydropower plants, oil roads, development of airports industrial parks, transmission lines, water and irrigation projects.
- Uganda public debt remains sustainable in the short, medium and long term. I reaffirm Government’s unwavering commitment that Uganda shall continue to honour its debt obligations as they fall due. Uganda will not default on repayment of its debt. All contractual debt obligations will be fully honoured.
92.Mr. Speaker, the Government will undertake the following key strategies, among other, to keep our debt within sustainable levels: –
i. ensure that projects are well appraised to allow only those that are viable and aligned to the national development plan;
ii. prioritise borrowing for only projects that enhance socio-economic transformation, and enhance project implementation;
iii. Prioritize borrowing from concessional sources; and
iv. Increase the maturity profile of our domestic debt.