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MPs Want Amendment of Income Tax Act to Exempt Tax on Agricultural Supplies

Government in the current financial year imposed a withholding tax of 1 percent tax on a person who makes a gross payment for agricultural supplies in excess of 1 million shillings. The tax is imposed on the gross amount of the payment.
30 Apr 2019 07:04
Parliament Finance Committee Chairperson Henry Musasizi.

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Members of Parliament sitting on Parliament’s Finance Committee are mooting an amendment of the Income Tax Act to have payments for agricultural supplies exempted.

During a meeting with officials from the Uganda Revenue Authority (URA) led by Cyprian Chillanyana, the Assistant Commissioner Domestic Taxes and Business Policy, the Finance Committee Chairperson Henry Musasizi proposed to have the 1 percent tax exempted in the next financial year.

Government in the current financial year imposed a withholding tax of 1 percent tax on a person who makes a gross payment for agricultural supplies in excess of 1 million shillings. The tax is imposed on the gross amount of the payment.

Musasizi proposed that agriculture supplies should be exempted from revolving tax saying that Agriculture is one of government’s priority Sectors and that there should be measures supporting the sector to grow.

The Committee is currently considering a number of tax proposals by government from which it seeks to collect 860 billion shillings revenue in the next financial year.

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Last year, the Ministry of Finance defended the 1 percent tax saying that it was only fair that those who earn money from agriculture contribute something into the national coffers.

The Commissioner Tax Policy at the Ministry of Finance Moses Kaggwa was then quoted saying that the tax was meant for only those selling to processing facilities and companies.

Chillanyana declined the proposed amendment saying that the measure was just passed last year after reducing it from the initial 6 percent tax. 

Without revealing the amount of money URA has so far collected from the 1 percent tax, he said that the tax is already performing well and should not be removed. 

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However, Chillanyana asked the committee for some more time to report back on the proposed exemption.

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