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Uganda Rejigs Tax Rates In 2014/15 Budget

by Lorys Charalambous,, Cyprus

20 June 2014

Ugandan Finance Minister Maria Kiwanuka has presented the Budget for 2014/15, which includes measures to raise revenues, enhance transparency in the field of tax administration and enforcement, boost compliance rates, and encourage investment.

On income tax, the Budget proposes to restrict accelerated and ordinary depreciation allowances; raise the presumptive tax rate on income to three percent from one percent; terminate the exemption for banks on interest income from agricultural loans; remove the exemption on income derived by persons from the ownership or management of an educational institution; introduce a definition of start-up costs; and tighten thin capitalization rules to limit deductions for interest paid to non-associated persons.

Next, on the proposals relating to value added tax (VAT), the Budget proposes to terminate exemptions on the supply of certain goods and services, including on computers and parts, liquefied petroleum gas, hotel accommodation in tourist lodges and hotels outside Kampala District, feed for poultry and livestock, agricultural and dairy machinery, salt, and insurance services (except medical and life insurance).

The Budget also proposes to terminate zero-rated treatment for certain supplies with effect from July 1, 2014. These supplies include printing services for the production of educational materials, cereals, processed milk and milk products, machinery and tools for agriculture, and seeds, fertilizers, and pesticides.

A capital gains tax will be introduced on the sale of commercial property. In addition, a 15 percent tax is proposed to be levied on winnings from sports and pools betting, with gambling houses designated as agents to withhold the tax. New taxes are also proposed on money withdrawal fees, bank charges, and money transfer fees.

The Budget also contains several excise duty changes. It proposes to increase excise duty on petrol and diesel, sugar, and to reinstate excise duty on kerosene, which was removed in 2010.

Last, the Budget proposes to integrate the government into the tax system by providing that all goods and services procured by the government, directly, or with aid, will be subject to tax.

"The Ministry has embarked on the process of integrating Government in the tax system and removing any distortions and loopholes that arise by not treating government transactions in the same way as those of private sector," Kiwanuka said in her budget speech.

TAGS: individuals | compliance | Finance | tax | investment | business | value added tax (VAT) | tax compliance | mining | interest | fiscal policy | insurance | individuals in business | budget | tax thresholds | fees | oil and gas | excise duty | enforcement | education | gambling | manufacturing | multinationals | tax rates | withholding tax | Uganda | tax reform | standards | trade | individual income tax | services

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