Finance Matia Kasaija has tabled the tax amendment bills 2018 for debate in Parliament and if passed by the MPs and assented to by President Yoweri Museveni as the law requires, Ugandans will find themselves paying more taxes amid biting poverty.
The bills include: The Income Tax (Amendment) Bill, The Value Added Tax (Amendment) Bill, The Excise Duty (Amendment) Bill, The Tax Procedures Code (Amendment) Bill, Gaming (Amendment) Bill, Stamps Duty (Amendments) Bill, Tax Appeals Tribunal (Amendment) Bill, and Traffic and Road Safety (Amendment) Bill.
If the bills are assented to by the President, they will become law effective July 7, 2018. Below Eagle Online highlights some of the new tax proposals in the Income Tax, VAT, Tax Procedures Code, Excise duty bills and Traffic and Roads Safely which has brought in registration and environment levies for different car molds.
Income Exempt from Tax
Tax SACCO’s: The bill proposes to repeal section 21 (ad) that was introduced in 2017 to exempt Savings and Credit Cooperative Societies (SACCOs) from paying income tax up to June 30, 2027.
The bill proposes to exempt from tax the income of a developer of an industrial park or free zone whose investment capital is at least USD 200m for a period of 10 years from the date of commencement of construction.
Also to be excepted from tax is the income of an operator in an industrial park or free zone or other business outside the industrial park or free zone whose investment capital is at least 30 million Dollars in the case of a foreigner or US $10 million in the case of a Ugandan citizen for five years from the date of commencement of business.
Interest on a mortgage to acquire or construct rentals
The bill proposes that interest on a mortgage from a financial institution as expenditure incurred by an individual to acquire or construct premises that generate rental income will be an allowable deduction.
Pay tax even when you make losses!
The bill is also proposing that a taxpayer who has carried forward losses for a consecutive period of seven years of income shall pay a tax at a rate of 0.5 per cent of the gross turnover for every year of income in which the loss continues after the seventh year.
Withholding tax on agricultural supplies
The bill proposes that a person who makes a gross payment for agricultural supplies in excess of One million Shillings shall withhold tax on the gross amount of the payment at the rate of 1 per cent from 6 per cent, if the payer is designated by the Minister to withhold tax.
Withholding tax on commission paid to airtime distributors and mobile money services
A telecommunications service provider who makes a payment of a commission for airtime distribution or provision of mobile money services shall withhold tax on the gross amount of the payment at the rate of 10 percent.
Withholding tax under VAT
The VAT bill proposes that the Minister shall, by notice in the Gazette, designate persons who shall withhold tax (VAT) on a payment for a taxable good and the persons designated shall remit to the Uganda Revenue Authority 50 per cent of the tax payable.
Interest on overpayments and late refunds
The minister has proposed that interest due and payable on overpayments and late refunds shall not exceed the principal tax.
The minister has proposed to exempt from VAT the following supplies:
The supply of Bibles and Korans, the supply of services to conduct a feasibility study, design and construction to a developer of an industrial park or free zone whose investment is at least US $200 million and the supply of earth moving equipment and machinery for development of an industrial park or free zone to a developer of an industrial park or free zone whose investment is at least US $200 million.
Also exempted for VAT is the supply of services to conduct a feasibility study and design; the supply of locally produced materials for the construction of a factory or a warehouse and the supply of locally produced raw materials and inputs or machinery and equipment to an operator within an industrial park, free zone or an operator with a single factory or other business outside the industrial park or free zone. The minimum requirement is investment capital of US $30 million in the case of a foreigner or US $10 million in the case of a citizen.
Exempted also is if a person carries on business in agro processing, food processing, medical appliances, building materials, light industry, automobile manufacturing and assembly, household appliances, furniture, logistics and warehousing, information technology or commercial farming. But that is if seventy percent of the raw materials used are sourced locally, subject to their availability.
Also if the activity directly employs a minimum of one hundred citizens; and provides for substitution of thirty percent of the value of imported products, it is exempted from VAT under the proposal.
Still exempted is the supply of services to conduct a feasibility study, design and construction; the supply of locally produced materials for construction of premises, infrastructure, machinery and equipment or furnishings and fittings which are not available on the local market to a hotel or tourism facility developer whose investment capital is US $15 million with a room capacity exceeding one hundred guests.
More, exempted from VAT are the supply of services to conduct a feasibility study, design and construction; the supply of locally produced materials for the construction of premises and other infrastructure, machinery and equipment or furnishings and fittings to a hospital facility developer whose investment capital is at least US $10 million and who develops a hospital at the level of a national referral hospital with capacity to provide specialised medical care. The supply of movie production is also exempted from tax.
Tax procedures code (Amendment) bill, 2018
Lotteries and Gaming licensed persons to furnish returns weekly
The bill proposes that in the case of the Lotteries and Gaming Act, 2016, a licensed person shall furnish a weekly return by Wednesday of the following week and a monthly return by fifteenth day of the following month.
Waiver of taxes due and unpaid by Government
The bill proposes that all taxes due and unpaid by Government except tax withheld by Government under subsection (1) as at June 31, 2018 are waived.
Mandatory Electronic receipting and invoicing
The bill proposes that a taxpayer may issue an e-invoice or e-receipt, or employ an electronic fiscal device which shall be linked to the centralized invoicing and receipting system or a device authenticated by the Uganda Revenue Authority.
The bill further proposes that the Commissioner shall, by notice in the Gazette, specify taxpayers for whom it shall be mandatory to issue e-invoices or e-receipts or employ electronic fiscal devices which shall be linked to the centralized invoicing and receipting system or devices authenticated by the Uganda Revenue Authority.
Traffic & road Safety (Amendment) Bill, 2018: Eight years old Motor Vehicles banned!
The bill is proposing that a person shall not import a motor vehicle which is eight years old or more from the date of manufacture. However, if this proposal goes through, it will not apply to the following vehicles; Road tractors for semitrailers; motor vehicles for the transport of goods with a gross vehicle weight of at least six tones.
Also protected are; special purpose motor vehicles including; breakdown lorries, crane lorries, fire fighting vehicles, concrete mixer lorries, road sweeper lorries, spraying lorries, mobile workshops, forklifts, mobile drilling rigs, mobile radiological units, works trucks, tanks and other armoured fighting vehicles and cesspool emptiers.
Others outside the bracket are water bowser, bullion spreaders, bitumen spreaders, bucket trucks, aircraft refuellers, spraying trucks, workshop vans and mobile banks; agricultural or forestry tractors; and earth moving motor vehicles, tamping machines and road rollers. motor vehicles which are in transit before the commencement of this Act and which arrive in Uganda by 30 September 30, 2018.