Uganda Manufacturers Association has rejected the proposal by Government to increase excise duty on fuel by UGX200, describing the timing as dangerous given the ongoing war in the Middle East that has led to a hike in prices of fuel across the world.
The rejection was led by John Jet Tusabe, Tax Policy Consultant at Uganda Manufacturers Association (UMA), while appearing before Parliament’s Committee on Finance to present the Association’s views on the eight Tax Bills that were presented by the Ministry of Finance recently.
The Manufacturers also questioned the rationale behind the increment on tax on fuel by Uganda, yet other nations whose citizens are grappling with high prices of fuel are putting in place policies to cushion their citizenry.
The Uganda Manufacturers Association also rejected the proposal by the Ministry of Finance to introduce excise duty rate of 3% for local and on imported 10% on paints, varnishes and lacquers, warning that such a tax will affect the cost of the construction industry, and further asked Parliament that if this proposal is to be maintained, then the rate has to be lowered to 1% and ensure that the rate is maintained with other East African Community products to ensure that Uganda aligns with other members states in reducing trade barriers.
Under the Income Tax Amendment Bill, Uganda Manufacturers Association backed Government’s proposal to exempt people earning less than UGX335,000 from paying Pay and You Earn, but asked to have the rates revised to UGX500,000, while those earning UGX10Million to have their PAYE threshold adjusted to 35% instead of maintaining it at 40%, owing to the inflation of the said funds that has raised the cost of living.
This prompted Moses Aleper, Vice Chairperson Finance Committee to ask, “Are you saying the base of argument is the time value of money? Are you saying it should be adjusted accordingly for all the brackets?”, to which Tusabe answered in affirmative.
Although Uganda Manufacturers Association backed Government’s proposal to introduce tourism hotel tax holiday for tourist facilities, saying it is going to encourage investment in Uganda’s tourism sector, UMA however wants a time limit imposed on how long such exemptions will be enjoyed, as opposed to leaving the proposal open ended.
Uganda Manufacturers Association also rejected the proposal by Government to exclude the claim of input VAT on imported software, where the Value Added Tax Act is being amended to ensure that when you import software through customs, that VAT you pay is not claimable, yet under the current law, when one imports software through online systems, they pay VAT at 18% as an imported service, and that VAT is not claimable, it’s an additional cost to the business.
However, if you imported the software as a good through customs, and it is imported through different media, and is declared and taxes paid, that VAT you pay is claimable, with Tusabe warning that already, Uganda is lagging behind in information technology.
