KAMPALA – The Uganda Revenue Authority – URA has said that Ugx2.88trn will be lost through tax exemptions in the financial year 2022/2023.
John Rujoki – the URA Commissioner General made the shocking revelation while appearing before the Parliamentary Finance Committee to present the tax body’s budget estimates for the financial year 2023/2024.
Documents tabled before the Finance Committee indicate Agro-processing; charitable organisations; commerce and industry; farming association; SACCOs; tourism associations; trade unions; exporters of 80 per cent of products; education public character; and others as some of the categories that are meant to benefit from tax exemptions.
On the other hand, some of the taxpayers that have in the past been recommended for tax waivers by the government are Brookside Limited, St. Mary’s Hospital Lacor, UGACOF Limited, FINASI-ISHU Construction SPV Limited, Kuka (U) Limited, Uganda Broadcasting Corporation, Kams Contractor and others.
According to the government tax expenditure report released in October 2021, a total of Ugx5trn in taxable revenue was forgone for exemptions and other incentives.
Finance Committee chairperson, Keffa Kiwanuka tasked URA to offer a plan that could counter the lost revenues through tax exemptions, tow which – the acting Commissioner of Tax Policy in the Ministry of Finance, John Byaruhanga said a Tax Expenditure Governance Framework and a Rationalization plan had been adopted.
Tax expenditure means the lost revenue as a result of preferences extended by the government to a particular group of taxpayers.
“Consultations with the President were concluded and we were given a green light to go ahead and do the analytical work that is going to inform the exact expenditures that are going to be adjusted,” said Byaruhanga.
He added that whereas they had already identified areas that the Ministry wants to touch, they were carrying out an analysis to determine the execution of the adjustments of the tax exemptions that they already have on the radar.
Byaruhanga told MPs that this was in the spirit of having an orderly withdrawal of the incentives.
In regard to the proposed tax measures for the financial year 2023/2024, Byaruhanga said that the Ministry does not expect much change from the policy angle.
He said that the measures were significantly going to be of a tax administration nature and that last week, the Ministry of Finance received the proposals from URA and they had already set up a meeting with the tax body next week to go through the submitted proposals.
Byaruhanga said that after this meeting, the proposals will then be submitted for approval to the Ministry of Finance’s top management.
The national budget for the next financial year 2023/2024 is projected at 49.98 Trillion Shillings, compared to Ugx48.13trn for the financial year 2022/2023.
The proposed budget will be partly financed through gross domestic revenue projected at Ugx29.78trn, of which tax revenue is Ugx27.77trn and Non-Tax revenue of Ugx2.009trn. This represents a growth in revenue estimates of Ugx4.23trn up from the Ugx25.5trn projected revenues for the current financial year.
Rujoki promised to undertake different activities to ensure taxpayer compliance and raise the projected revenue.
Amos Lugoloobi -the Minister of State for Planning said that the government’s revenue strategy was to continue the implementation of the domestic revenue mobilisation strategy that contains both tax policy and tax administration reforms. He said that the core objectives were to mobilise sufficient revenue and provide the right incentives to support industrialisation and the development of domestic value chains.
Additional reporting by URN
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