Government has proposed Value Added Tax (VAT) exemptions on a number of agricultural, tourism and health items in the 2017/2018 financial year.
In the agricultural sector, tax exemptions have been proposed on supply of crop extension services; supply of irrigation works, sprinklers and ready to use drip lines.
Others are supply of deep cycle batteries and composite lanterns.
In the 2016/2017 financial year, government waived VAT on hullers, oil presses; grain dryers; manure spreaders; fertiliser distributors; transplanters; juice presses and crushers; seed and grain shellers; silage chopper machines; colour sorters for coffee and coffee roasters.
Government has also proposed an exemption of VAT on supply of menstrual cups, which are made of medical silicone and used by girls and women during menstruation period.
The move by government could be viewed as growing pressure from civil society activists pushing for the provision of free sanitary pads to girls in schools.
Renowned rights activist, Stella Nyanzi, championed the campaign, in which she faulted President Museveni of reneging on his pledge during campaigns before the 2016 general elections, to provide funding for sanitary pads for the school going girls.
Hon David Bahati, State Minister of Finance presented five tax bills before Parliament’s Finance Bill today 10 April, 2017 including the VAT Amendment Bill, Tax Procedures Code Amendment Bill, Income Tax Amendment Bill, Excise Duty Amendment Bill and Lotteries and Gaming Amendment Bill.
In the tourism sector, government will exempt taxes on tourist arrangement services, access to tourist sites, tour guides and game driving services.
Under the Income Tax Amendment Bill, government proposes to exempt payment of income tax on income accrued by bodies established by an Act of Parliament to regulate the conduct of professionals.
According to Hon Bahati, bodies like Uganda Law Society, which is the regulatory body for lawyers, and the Institute of Certified Public Accountants of Uganda (ICPAU), will be exempted from paying income tax.
Also exempted from income tax is the Bujagali Hydropower project up to 2033, when the project is expected to be completed. Local companies which set up some capital investments outside a radius of fifty kilometers from Kampala will be provided a deduction of initial allowance.
Government has also introduced a 15% withholding tax on an individual who gets winnings from sports betting or pool betting. The Lotteries and Gaming Act 2016, which legalizes gambling in the country, provides that a 35% gaming tax is levied on winnings to be paid by owners.
These include lotteries, casinos, slot machines, sports betting and horse racing.
In the new proposals, Bahati revealed that the tax has been restructured to ensure that an individual who is paid betting winnings pays a 15%tax of his warnings while the owner of the machine pays 20%.
“What we have now discovered is that this tax needs to be restructured. What is happening now is the owner pays 35% yet it was becoming problematic to implement. So let each one of them bear the burden of tax. That’s the rationale of spreading it,” Bahati said.
However, some legislators expressed reservations over the gambling business, noting that in as much as government is slapping these taxes; the vice has become addictive especially among jobless youths.
But Hon Bahati said the 15% tax on winnings will act as a deterrent to people who gamble.