When the tax measures were announced in June, business community organisations at the time argued that the government should have instead waived the taxes, because deferring them is only postponing the burden to a time when it will have accumulated.
The business community might have to forget the tax
incentives that the government offered them to mitigate the effects of the
COVID-19 pandemic on their businesses, as there is no necessary legislation to enable their enforcement.
The 2020/2021 budget was delivered under the theme:
Stimulating the Economy to safeguard Livelihoods, Jobs, Businesses and
Industrial Recovery and this was in line with the president’s State of the
Nation Address, where he proposed tax relief measures for the private sector.
The budget Speech confirmed
the president’s directive and provided for initiatives like reducing tax rates
for small businesses and deferring until September 2020, payment of Corporate
Income Tax, and Presumptive tax for Small and Medium Enterprises.
Under this, the directives deferred
payment of Pay and You Earn tax (PAYE) for the period April to June, to September,
waived interest or penalties that would accumulate on the tax that has been
deferred. It also intended to waive interest
and penalties on tax arrears accumulated before July 1, 2020, to lessen the tax
liability of businesses who voluntarily comply with their tax obligations.
These tax incentives were
however supposed to be affected by tax amendment bills, that would give Uganda
Revenue Authority the leeway to suspend the demand for these taxes.
On its part, URA in the meantime,
offered taxpayers its own incentives including voluntary disclosures, where a taxpayer is in distress or in arrears, which then URA uses to give amnesty to
the taxpayer to avoid penalties on the arrears. The Commissioner for Domestic
Taxes Abel Kagumire said the tax body’s hands are tied until they get communication from
the ministry after the parliament has passed the amendments laws and the
president assented to them.
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When the tax measures were announced in June, business community
organisations at the time argued that the government should have instead waived
the taxes, because deferring them is only postponing the burden to a time when
it will have accumulated.
Among the Bills presented by the Ministry of Finance
Planning and Economic Development were the Income Tax Amendment (2) Bill 2020,
and the Tax Procedures Code (2) Bill which provides for the waiver of
outstanding interest and penalties owed by taxpayers as of June 30, 2020.
The Income Tax Amendment provides for the deferral of
Corporation Tax till September 30th 2020, for the tourism, horticulture,
floriculture, manufacturing and education sectors, which the government then
said, were hardest hit by the pandemic.
Unfortunately for the business community, of the six Bills
sent to the president for assenting to, only the Excise Duty and the VAT
Amendment bills were successful, while the other four were retuned and re-tabled
by the Finance Ministry, in June.
Since then, however, they have never been debated on the
the flour of parliament.
Non-governmental Organisations uniting under the Tax Justice
Alliance have called for the immediate expediting of the process if the incentives
are to be meaningful to the economy.
In the joint appeal read by ActionAid Uganda Country Manager
Patrick Ejoyi, they call on the government to extend the incentive period to
March next year for better preparation.
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Last week, Uganda Revenue Authority announced that they had
made a surprise surplus on collections for the first quarter ended September
30, of 1 trillion shillings, against a target of 3 trillion. This target was reduced when the finance ministry revised
downwards to the annual target by about 2 trillion Shillings.
The NGOs condemned the MP's on the budget committee for
saying if money is needed to enforce the measures, they will go back and
approve supplementary budgets.
The Budget Policy Specialist at the Civil Society Budget Advocacy
Group, Patrick Lubangakene says the parliament’s actions are making the
government and Uganda Revenue Authority act on wrong data and this will make
the budget implementation process to falter.