- Reprieve for Uganda has the government reiterated no intention to increase tax rates
2023: No New Taxes in Uganda. As crucial as tax collection is to a country’s revenue, it is sometimes more important to implement ways to ease the taxpayer’s burden rather than focusing on the amount of revenue that can be gotten from them.
This sometimes comes in tax relief or tax exemption, a situation where the government allows certain taxpayers to skip tax payments for one reason or the other, temporarily or permanently.
In Uganda’s case, the government had decided to provide ease for taxpayers by not introducing new taxes during the 2023/24 financial year.
2023: No New Taxes in Uganda
During an interview on the sidelines of a joint news conference between the International Fund (IMF), Finance Ministry, and Bank of Uganda, Secretary to the Treasury, Mr. Ramathan Ggoobi revealed that apart from not introducing the new tax, the government won’t be increasing the existing ones either.
He explained that the decision to increase tax usually spells hardship for taxpayers who are already trying their best to keep up with their payments.
He continued that what the government will do instead is widen the tax base by enrolling more taxpayers in the system.
There will also be an implementation of reforms and huge support for economic productivity.
Taxpayers are however informed to not expect any tax cuts during the 2023/24 financial year.
The government’s reason for this move
The rationale behind 2023: No New Taxes in Ugandais the government’s decision to not introduce a new tax or increase existing ones is its desire to help the private sector survive a harsh economic environment.
A situation that is greatly fueled by high inflation and subdued demand.
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Tax Incentives and Exemptions
According to Mr. Ggoobi, one of the ways through which the Ministry of Finance plans to expand the tax base is to provide tax invention and exemption.
This will be done in a way that the Ministry can monitor and measure the compliance of beneficiaries as well as the benefit to the government.
Mr. Gogobi also revealed that the government had in the past offered incentives or tax exemptions to encourage the private sector to invest in difficult sectors of the economy.
However, some of these privileges have been abused.
The Value of Tax Incentives and Exemptions Forgiven
The data available shows that, every year, up to Shs1.5 trillion is forgiven as a result of tax incentives and exemptions.
He mentioned that even though the government forfeits 2.1% of revenue as a result of tax invention and exemption, the country’s tax to gross domestic product ratio isn’t experiencing any form of improvement.
Instead, it remains one of the lowest in East Africa and sub-Saharan Africa, which is very disappointing.
To rectify the situation, the government has implemented certain plans to preserve at least 0.1% of the tax to gross domestic product losses.
The hope here is that the government will be able to increase the tax to gross domestic product ratio from the current 12% that it is to 20%.
URA Directs Entertainers To Get TINS
To ensure a systematic collection of taxes, the Uganda Revenue Authority (URA) has urged entertainers including event promoters, musicians, deejays, veejays, authors, and others to obtain Tax Identification Numbers (TINs).
The tax authority has instructed people who earn income from the entertainment sector to get TIN to allow public entertainment event owners to withhold tax on payments and charge value-added tax.
This will help to increase revenue for the government as the owners will be obligated to remit the withheld tax to the government.
The deduction of tax will apply to payments for both resident and non-resident entertainers earning income within Uganda.
According to the Uganda Bureau of Statistics, the entertainment sector is the main contributor to the country’s revenue as the sector contributes up to Shs47.1 trillion to the economy.
The government has warned that any entertained who intentionally fails to register for taxes with URA faces a fine of up to Shs3m or imprisonment of up to six years or both.
What is a Tax Identification Number (TIN)
A Tax Identification Number (TIN) is a 10- digit unique number issued by the Uganda Revenue Authority (URA) to verify a person’s status as a duly registered taxpayer.
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