PARLIAMENT – The government has announced new tax strategies in which it aims at collecting UGX862b in the next financial year.
Appearing before Parliamentary Committee on Finance on Wednesday, State Minister for Planning David Bahati said the government has drafted a domestic revenue mobilisation strategy aimed at reducing dependence on donor funds.
Mr. Bahati said the measures involve utilizing electronic devices such as e-voicing and digital tracking to collect as much revenue as possible.
“Among the reforms to be implemented is an escalation of import tariffs on products, which are locally manufactured to protect Ugandan industries and promote industrialisation,” he said.
Mr. Bahati revealed that some of tax measures involve removing tax waivers for local and foreign investors by reducing investment requirements.
For investors in industrial parks, government will lower investor requirements from $100 million (UGX374b) to $50 million (UGX187b) for foreigners and $10 million (UGX37b) to $2 million (UGX7.5b) for locals. This, the minister said, is intended to encourage foreign investors to come to Uganda.
The government is also proposing to reduce withholding tax on long term bond from 20 per cent to 10 per cent in the bid to encourage investment and reduce financing costs.
Mr. Bahati noted that expenditure-to-GDP ratio is 22 per cent, implying a deficit of 7.1 per cent.
“To finance, this deficit, government has to borrow. However, this is not sustainable since borrowing comes with conditionalities and interest expenses thus the need for raising the revenue effort to fully finance the budget,” he said.
The government also proposes a uniform stamp duty of UGX100,000 for all investors to ease processing of registrations of title and related documents. The new tax measures become effective in July 2019.