The Ministry of Finance has introduced six new taxes meant to provide local revenue to fund the country’s budget. The mechanism is also supposed to limit the country’s debt burden by increasing the earning from local revenue to fund the country’s budget rather than borrowing from foreign donors.
Newly appointed Minister of stater for Planning, Mr. Amos Lugoloobi while presenting the National Budget for FY 2021/22, he said it is estimated that domestic revenue in the next financial year will amount to UGX 22.425 trillion, 13.8% of the country’s GDP unlike the estimated UGX 19.432 trillion, 13.1% GDP in FY 2020/21.
Additionally, Mr. Lugoloobi said the 0.7% increase in GDP is aimed at being raised from improvement in levels of economic activities, an increase in efficiency of tax collection by URA to be attained through strengthening compliance and enforcement plus new tax measures and administration reforms.
This is meant to be achieved through policy intervention to be implemented during the financial year such as reform taxation of rental income eradicating the incentive for non-individual rental taxpayers so as to attain limitless reductions that limit on tax contributions.
Also a drop in rates of depression for some assets, a stop in the concurrent reduction from first allowances and depreciation in the starting year of the use of the qualifying assets.
Further more, he spoke about reviewing the capital gains tax regime by allowing for the impact of inflation and availing tax relief for venture capital investments, broaden the scope of taxation of plastics to include all plastics.
In relation to telecommution services, the Minister suggested scrapping the excise duty on Over The Top (OTT) but to replace it with a unified excise duty rate of 12.0% on airtime, value-added services and internet data apart from data for provisions of medical and education services.
He also spoke about levying a 7% tax on the value of fish maw exports, an export levy on both processed and unprocessed gold alongside other minerals as he said; “Introduce an export levy of 7 per cent on the value of fish maw exports, Impose an export levy of 5 per cent and 10 per cent on processed and unprocessed gold and other minerals respectively.”
Uganda Revenue Authority is expected to implement the tax administration measures aimed at boosting revenue collection by strengthening tax arrears management and recovery, enhancing data analysis by interfaces with other government information systems to boost taxpayer cooperation.
The national regulatory authority also agreed to enforce tax compliance by implementing the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) and Digital Tax Stamps; Enforce 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 800 billion in revenue collections,” Mr Lugoloobi further informed.
Local governments’ capacity to collect revenue shall also be enhanced to boost local revenue and this will be attained by training and ICT infrastructure installment according to Mr. Lugoloobi.
“It is premised on mobilizing a higher level of domestic revenue and enhancing returns from public investment. The Government will also undertake a review of public expenditure to improve efficiency,” he went on to say.
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As for the economic growth strategy, Mr. Lugoloobi said for medium term sims to be attained faster, inclusive growth and enhanced socio-economic development. They aim at raising growth rates to an estimated 7% in FY 2021/22 from 4.3%.
These strategies he believes will aid in achieving the set medium-term objectives in three-folds which are; restoration of the economy to medium-term growth path, improving the wellbeing of the population to ensure a healthy and skilled workforce and providing peace, security and good governance.