COVID19 Budget FY 2019/20: Tax reliefs for businesses facing hardships following the COVID19
On 11th June, Finance Minister Matia Kasaija presented the Budget Speech for Financial Year 2019/20 to Parliament based on the theme: ‘Stimulating the Economy to safeguard Livelihoods, Jobs, Businesses and Industrial Recovery.’
The Minister in his speech listed tax relief measures for businesses facing hardships following the COVID19 pandemic, saying that the measures would go a long way address the short-term emergency liquidity requirements of businesses, boost their cash-flows and ensure business continuity.
As regards the payment of Corporate Income Tax or Presumptive Tax for Corporations and Small, Medium Enterprises (SMEs), Matia Kasaija confirmed that he had differed its payment until September 2020.
“I am deferring until September 2020, the payment of any Corporate Income Tax and Presumptive Tax due 1st April 2020 to 30th June 2020, for tax complaint businesses with a turnover of less than five hundred million per annum. Furthermore, no interest or penalties will accumulate on these amounts during this period.” Hon. Matia Kasaija.
The Minister also revealed that he had decided to defer payment of Pay As You Earn (PAYE). The Minister was, however, quick to reveal that the offer was for tax compliant Ugandan businesses facing hardships as a result of the COVID-19 pandemic.
“I am deferring payment until September 2020 of PAYE due from 1st April 2020 to 30th June 2020 for tax compliant Ugandan businesses facing hardships as a result of the COVID-19 pandemic. No interest will accumulate on tax due during this period.”
The Minister further highlighted that he had waived interest and penalties on tax arrears accumulated before 1st July 2020 to lessen the tax liability of businesses who voluntarily comply with their tax obligations.
Regarding the tax-deductibility of donations for the COVID19 response, the Minister noted that he had allowed the value of the donations the private sector has made towards the Corona Virus Response.
“I am allowing the value of the donations the private sector has made towards the Corona Virus Response.” Hon. Matia
Matia additional revealed that Uganda Revenue Authority would speed up payment of outstanding value-added tax (VAT) refunds due to businesses accompanied by measures to limit fraud.
To ensure financial sector stability in support of the economy, the Minister reiterated Bank of Uganda’s pronouncements on measures that are being implemented to mitigate risks to overall economic growth.
The Measures put in place by the Bank of Uganda to mitigate risks to overall economic growth included:
- Providing for adequate capital buffers for supervised financial institutions to ensure effective operation by deferring payments of all discretionary dividends and bonus payments for at least 90 days effective March 24, 2020.
- Smoothening out volatility in the foreign exchange market arising from global financial markets;
- Providing exceptional liquidity assistance for a period of up to one year to Supervised Financial Institutions that may need it;
- Waiving limitations on the restructuring of credit facilities.
- Encouraging the reduction of Mobile Money and other digital Transaction fees that are charged by Mobile Network Operators and commercial banks, to limit the use of cash and customer visits to banks.
The Minister in his concluding remarks stated that COVID19 had necessitated additional interventions and resource allocations after the Budget was approved. He, therefore, told the MPs that he would return to Parliament for adjustment of the budget passed.