Governments’ budgets are fundamentally about people’s human rights and are the central means by which the State can help realize their people’s access to quality services like education, decent health care, peace security, social protection, clean water, and other goods and services essential for people to live their lives with dignity. The National Budget for 2021/2022 was read on Thursday, June 10, 2021, at Kololo Independence Grounds, where Parliament sat and passed the shs44.7 trillion budget for the F/Y 2021/22.
There were several tax proposals tabled in parliament for discussion however, the challenge is that on paper, the tax proposals look good and it appears as if the proposals will expand the tax base, but practically may not be enforceable as it’s been the practice over the years.
INCOME TAX ACT AMENDMENTS
1. NEW RENTAL TAX RATES FOR INDIVIDUALS
Under the Rental tax bill, every landlord will pay rental tax at the same rate of 30% which was formerly at 20%. This proposal puts individual and non-individual landlords on an equal footing, imposing an effective tax rate of 12 percent on gross rental income.
2. EXEMPT INCOME
Paragraph(z) in section 21 of the Exempt income derived from Agro-processing has been revoked. Therefore, this implies that income derived from Agro-processing is no longer exempt.
Exempt income derived from operating in an industrial park or free zone has to include manufacturers’ chemicals for agricultural use, electrical equipment, industrial machinery, sanitary pads, and diapers.
3. EXCISE DUTY
Motorists will pay an additional Ugx.100 in tax per litre of petrol and diesel. Already, the government is collecting Ugx.1,350 per litre of petrol in taxes and Ugx.1,030 in revenue per litre. Under the Traffic and Road Safety Act (Amendment) Bill, 2021, the fuel tax is expected to fetch an additional Shs196 billion, and in summary, this compensates for the annual road license fee of Shs200,000 per motor vehicle and Shs50,000 per
motorcycle. Over the Top (OTT) service charge has been repealed and introduced a harmonized excise
duty rate of 12.0% on airtime, value-added services, and internet data excluding data for the provision of medical services and the provision of education services.
4. THE FISH ACT
Introduction of an export levy of 8% on the total value of fish maw exported out of Uganda.
The levy shall be paid by the exporter to Uganda Revenue Authority at the time the fish maw is exported out of Uganda.
5. THE MINING ACT
A levy on the export of processed gold has been put at a rate of 5% of the value of a kilogram exported out of Uganda. This shall be paid by the exporter to URA at the time it is exported out of Uganda.
A levy on unprocessed minerals has been put at a rate of 10% of the amount/quantity exported out of Uganda. This shall be paid by the exporter to URA at the time the unprocessed minerals are exported out of Uganda.
written by Joan
