Government has announced plans to revamp the tax incentive framework amidst concerns that the current system is stifling economic growth.
The move comes as Prime Minister Robinah Nabbanja acknowledged the need for targeted and effective tax incentives to boost key sectors such as manufacturing, agriculture, and technology.
Speaking at the Conference on Tax Incentives, Tax Policies, and Tax Administration for Ugandan Investors on September 4, 2024, at Hotel Africana, Nabbanja assured over 500 investors of the government’s dedication to refining tax policies that spur economic growth and development.
“Our aim is to ensure that tax incentives are effective in attracting investment, transparent, and provide value for money,” she said.
Nabbanja emphasized the need for targeted and effective tax incentives to boost key sectors like manufacturing, agriculture, and technology. She acknowledged the vital role local investors play in Uganda’s economic development, highlighting their contributions to job creation, industrialization, and reducing reliance on imports.
The government’s promise to streamline tax incentives comes in response to concerns about the current tax framework’s complexity and perceived imbalance. Nabbanja noted the need to continuously review and refine the tax incentive framework to maximize its impact while safeguarding the country’s revenue base.
“We must protect our revenue base, as over-reliance on tax incentives can lead to revenue losses that could affect our ability to finance critical public services,” she added.
Permanent Secretary Ramathan Ggoobi echoed Nabbanja’s sentiments, stressing the importance of a balanced approach to tax incentives. “Our tax policies aim to ensure fairness, equity, and simplicity, not just revenue collection,” Ggoobi said.
Minister Evelyn Anite emphasized the importance of government-private sector collaboration in developing tax policies that address real challenges faced by investors. “We are committed to creating a level playing field where both local and foreign investors can thrive,” Anite said.
Local investors raised concerns about fines and penalties imposed by government agencies, which some perceive as overly punitive. Deo Kayemba, Chairman of the Uganda Manufacturers Association, called for more focus on education and sensitization rather than penalties.
“There should be a greater emphasis on supporting businesses to comply with tax regulations rather than prioritizing revenue from fines,” Kayemba argued.
In response, State Minister Henry Musasizi assured investors that the government is reviewing existing tax incentives to ensure they are strategically focused and aligned with national development goals. “We are looking at ways to make the tax system more conducive to business growth while ensuring fairness and inclusivity,” Musasizi stated.
The conference concluded with a commitment from the government to work closely with local investors in refining tax policies, aiming to develop a streamlined tax system that supports sustainable economic growth, encourages investment, and ensures Uganda remains an attractive business destination.
