UGX 2.8 Trillion to Be Lost in Tax Exemptions – URA

The Uganda Revenue Authority-URA has said that 2.88 trillion Shillings in form of tax exemptions will be lost in the current financial year 2022/2023.

John Rujoki, the URA Commissioner General revealed this on Tuesday to Parliament’s Finance Committee while presenting the tax body’s budget estimates for the next financial year 2023/2024. 

Documents before the Finance Committee indicate Agro-processing, charitable organizations, commerce and industry, farming association, SACCOs, tourism associations, trade unions, exporters of 80 percent of products, education public character, and others as some of the categories are benefiting 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 5 trillion in taxable revenue was forgone for exemptions and other incentives.

Tasked by Finance Committee Chairperson, Keffa Kiwanuka about the government’s tax expenditure plan given the money lost, the acting Commissioner of Tax Policy in the Ministry of Finance, John Byaruhanga said they have already adopted a Tax Expenditure Governance Framework and a Rationalization plan.

Tax expenditure means the lost revenue as a result of preferences extended by the government to a particular group of taxpayers.

“Consultations with His Excellence 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 in part.

He added that whereas they have already identified areas that the Ministry wants to touch, they are 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 is in the spirit of having an orderly withdrawal of the incentives. 

In regard to the proposed tax measures for the next financial year 2023/2024, Byaruhanga said that the Ministry does not expect much change from the policy angle.

He said that the measures are significantly going to be of a tax administration nature and that last week, the Ministry of Finance received the proposals from URA and they have 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 48.13 trillion for the current financial year 2022/2023.

The proposed budget will be partly financed through gross domestic revenue projected at 29.78 trillion, of which tax revenue is 27.77 trillion and Non-Tax revenue of 2.009 trillion. This represents a growth in revenue estimates of 4.23 trillion up from the 25.5 trillion projected revenues for the current financial year. 

Rujoki said that they are 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 is to continue the implementation of the domestic revenue mobilization strategy that contains both tax policy and tax administration reforms. He said that the core objectives are to mobilize sufficient revenue and provide the right incentives to support industrialization and the development of domestic value chains.

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