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A Simple Breakdown Of Uganda’s Shs72.13 Trillion Budget For FY 2024/25

Finance Minister, Matia Kasaija (Centre) with his junior Ministers before he left Ministry of Finance headquarters for Kololo independence grounds to read the budget for FY 2024/25 on behalf of the President/ Ministry of Finance Photo

Uganda’s  total resource envelope for Financial Year 2024/25 amounts to Shillings Seventy-Two Trillion, One Hundred and Thirty Six Billion, Five Hundred and Four Million, Two Hundred and Fifty Three Thousand, Four Hundred and Sixty Six Shillings (Shs. 72,136,504253,466/=) trillion.

The Minister of Finance, Planning and Economic Development,  Matia Kasaija read the national budget for Financial Year 2024/25 at Kololo Ceremonial Grounds on Thursday afternoon.

The theme for the coming financial year has been maintained as: “Full Monetisation of the Uganda’s  Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, Digital Transformation and Market Access”.

According to Kasaija, domestic revenues amount to Shs 31.982 trillion, of which Shs 29.366 trillion will be tax revenue and Shs 2.616 trillion will be non-nax revenue.  Budget Support will account for Shs 1.394 trillion; Domestic Borrowing – Shs 8.968 trillion; Treasury bonds for settlement of Government outstanding obligations to Bank of Uganda as at 30th June 2024 – Shs 7.779 trillion; Domestic Refinancing of maturing domestic debt – Shs 12.022 trillion; Petroleum Fund drawdown – Shs 115.4 billion; Project support (external financing) – Shs 9.583 trillion; and Local Government revenue collections – Shs 293.9 billion.

The total government expenditure for FY 2024/2025 is projected at Shs. 72.136 trillion; of which the total appropriation is Shs 37.56 trillion and statutory expenditure is Shs 34.756 trillion.

Kasaija says wages and salaries are projected to amount to Shs 7.926 trillion, non-wage recurrent expenditure to Shs 17.454 trillion, development expenditure from own resources to Shs 6.152 trillion, external project financing Shs 9.584 trillion, appropriation in aid to Shs 293.9 billion, while external debt repayment will amount to Shs 3.149 trillion.

The FY2024/25 budget has been designed to target seven key priorities. These are:

i) Investing in the people of Uganda through education, health and water, sanitation and hygiene, for which Government has provided a total of Shs 10.204 trillion;

ii) Peace and security of all persons in Uganda. Finance has allocated a total of Shs 9.107 trillion, including a 25 percent enhancement of salaries of all security personnel at the rank of Captain and below;

iii) Maintenance of all roads, construction of a few strategic roads, as well as rehabilitation of the Metre Gauge Railway and construction of the Standard Gauge Railway. Finance has  provided Shs 4.989 trillion for these;

iv) Investing in wealth creation initiatives, including commercial agriculture, value addition (UDB and UDC), the Parish Development Model (PDM), Emyooga, Agriculture Credit Facility, tourism, science-based research, and youth skilling, export promotion programme, and the GROW Project. Thees have been allocated a total of Shs 2.641 trillion;

v) To facilitate electricity transmission, distribution and utilisation of existing energy stock, Finance has allocated Shs 982.6 billion;

vi) Natural disasters (Contingency Funding), to which Government has allocated Shs 146.1 billion; and

vii) Uganda’s international commitments for regional and global partnerships, Shs. 31.1 billion.

Kasaija said the above priorities are in support of the anchor sectors that have been identified to drive rapid expansion of the economy.

The budget has also identified four anchor sectors to drive growth; agro-industrialisation, tourism development, mineral development including oil and gas, as well as science, technology and innovation, including ICT.

The Minister said starting FY 2024/25, Accounting Officers of revenue generating entities will sign commitment contracts against the agreed revenue performance targets upon which budget allocations have been made, in addition to the performance contracts they sign annually.

Domestic Revenue Mobilisation

He added that to collect the projected revenue for FY 2024/25 of Shs. 31.982 trillion, a mix of modest tax policy measures were proposed and approved by Cabinet and Parliament.

These will be complemented by enhanced tax administration by Uganda Revenue Authority (URA) and rationalisation of tax exemptions in line with the Domestic Revenue Mobilisation Strategy.

Tax Measures for Financial Year 2024/25

The following are the modest changes in taxes that were approved by Parliament to raise more revenue and/or improve the budget environment:

Excise Duty

i) Imposition of excise duty on powdered beer at Shs 1,000 per kilogram

ii) Imposition of excise duty at a rate of 0.5 percent of the value of withdrawals of money from other platforms other than mobile money. This does not apply to withdrawals from agent banking or banking halls.

iii) Increase excise duty on petrol by Shs 100 per litre.

iv) Increase excise duty on diesel by Shs 100 per litre.

v) Increase excise duty on imported wines from 80 percent or Shs 8,000 per litre to 100 percent or Shs 10,000 whichever is higher.

vi) Imposition of excise duty on adhesives, grout, white cement and lime. “The objective is to align the tax treatment of these products with that of cement,” he said.

Value Added Tax (VAT)

Under VAT, Kasaija said,  the supply of electric motorcycles, vehicles manufactured or fabricated in Uganda and their respective charging stations and batteries for electric motorbikes, charging stations and related services are exempt from tax.

The objective is to facilitate the growth of e-mobility and affordability of electric cars and motorcycles and protect the environment.

“Starting next financial year, the provision of taxable goods/services by an employer to an employee will attract VAT,” he said.

Income Tax

Under the Income Tax Act, incentives  have been provided for the following:

i) Government has exempted investors from tax capital gains arising from the sale of holdings in private equity or venture capital funds regulated by the Capital Markets Authority. The intention is to incentivise private equity or venture capital investments in Uganda;

ii) Government has provided tax holidays on the income of a person who manufactures and fabricates electric motor vehicles, electric motorcycles, electric batteries and electric vehicle charging equipment, as well as the income of a person who develops, establishes or operates a medical facility or hospital facility;

iii) Finance has also extended the waiver of penalties and interest on arrears outstanding by June 2023. This waiver will apply when the taxpayer pays between July and December 2024; and

iv) Government has  introduced a 10 percent withholding tax on commission paid to the banking agents and fintech agents (payment service providers).

Tax Administration Measures

Kasaija said much of the anticipated additional revenues will be generated from compliance measures undertaken by URA. These include:

i) Expanding URA presence and coverage by opening up 5 liaison offices;

ii) Strengthening the enforcement and use of Electronic Fiscal Receipting and Invoicing System (EFRIS) and Digital Tax Stamps (DTS) and the rental tax solution;

iii) Strengthening the exchange of information with other tax authorities tocombat illicit financial flows and under-declarations; and

iv) Strengthening enforcement interventions.

“I call upon all of you colleagues and fellow Ugandans to render URA and other revenue-collecting institutions the necessary support to mobilise the revenue required to meet the targets for FY2024/25. We must raise more revenue and reduce reliance on borrowing and external grants,” said Kasaija.

Taddewo William Senyonyi
https://www.facebook.com/senyonyi.taddewo
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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