The Ministry of Finance has revealed that in the past 5years, Uganda has foregone taxes to a tune of over Shs12.247 trillion, following the award of tax exemptions to several taxpayers.
The details are contained in the Tax Expenditure Report FY22/23 that was recently published by the Ministry of Finance, which indicated that in 2022/23 alone, Shs2.972 trillion was foregone in revenue, despite several critiques questioning the rationale & the absence of criteria used to award these tax exemptions.
“For the value of foregone revenue due to tax expenditures is estimated to stand at Shs2.972 trillion, or 1.62% of GDP. The total amount of tax collected during 2022/23 is Shs23.733 trillion, meaning that the value of revenue foregone due to tax expenditures is equal to around 12.5% of total tax collections. Based on estimates, VAT is the tax head where revenue foregone associated with tax expenditures is highest. The cost of VAT expenditures in FY 2022/23 is estimated at Shs992.2 billion- equivalent to 0.54% of GDP and accounting for 33.3% of the total revenue foregone from tax expenditures in Uganda,” read in part the report.
The report revealed that the decision to exempt MPs from paying taxes on their emoluments has seen Uganda lose out over Shs638.6 billion in taxes in the past five years. This followed an amendment to the Income Tax Act in 2016, where MPs agreed to exempt their emoluments from tax, on the grounds that the move would relieve MPs from the burden of paying taxes and recognize expenses incident to the discharge of their duties.
The report also highlighted that Ugandans have lost out revenue to a tune of over Shs965.65 billion following tax exemption given out to officers in security agencies, while Shs30.340 billion has been foregone in tax exemption to officials in Judiciary.
