Business owners in Uganda have a reason to smile going by the set of tax relief measures to businesses contained in the 2020/2021 budget.
The Minister of Finance, Matia Kasaija while reading the 2020/21 national budget speech at Parliament noted that the move is aimed at helping address the short term emergency liquidity requirements of businesses, boost their cash-flows, and ensure business continuity.
Consequently, Government has agreed to defer payment of Corporate Income Tax or Presumptive tax for Corporations and Small, Medium Enterprises (SMEs.
“I am deferring until September 2020, the payment of any Corporate Income Tax and Presumptive Tax due 1st April 2020 to 30th June 2020, for tax complaint businesses with a turnover of less than Shs500 million per annum,” Kasaija said, adding that Government has ordered Uganda Revenue Authority (URA) to waive interest or penalties that will accumulate on these amounts during this period.
“This is aimed to benefit companies and Small or Medium Enterprises (SMEs) especially in tourism, manufacturing, horticulture and floriculture,” the Minister said.
According to Government, taxpayers benefiting from this measure for whom Corporate Incomes Tax is applicable is 10,140 and the deferred tax is estimated to be Shs12.5Bn. The number of tax payers benefiting from the presumptive tax measure is 23,892, and the deferred tax is estimated to be Shs1.38bn.
Government has also deferred payment of Pay as You Earn by sectors affected.
“I am deferring payment until September 2020 of PAYE due from 1st April 2020 to 30th June 2020 for tax compliant Ugandan businesses facing hardships as a result of the COVID-19 pandemic. No interest will accumulate on tax due during this period,” Kasaija said.
The move will see an estimated Shs65.35 billion due from Pay As You Earn (PAYE) for manufacturing and tourism sectors is being deferred. For floriculture sector, the expected PAYE deferral is Shs0.237 billion.
Government has also waive interest on tax arrears with Kasaija remarking, “I am waiving interest and penalties on tax arrears accumulated before 1st July 2020 to lessen the tax liability of businesses who voluntarily comply with their tax obligations. The expected tax relief as a result is Shs50 billion.”
Further, Government has directed Uganda Revenue Authority to expedite Payment of outstanding VAT refunds to which the Minister said, “The Uganda Revenue Authority will speed up payment of outstanding VAT refunds due to businesses accompanied by measures to limit fraud. An additional Shs120.53 billion will be refunded.
The Resource Envelope of Financial year 2020/21 totals Shs.45.493 trillion of which Domestic Resources amount to Shs.25.58 trillion.
Domestic Financing amounts to Shs3.56 trillion; while External Financing consists of Project Support of Shs9.515 trillion and General Budget Support Shs. 2.906 trillion. Domestic re-financing amounts to Shs.7.486 trillion and Appropriation in Aid is Shs 215.6 Billion.
The total Expenditure amounts to UShs37.792 trillion of which Recurrent Expenditure is UShs19.787 trillion and Development Expenditure is UShs. 18.004 trillion.
