State Minister for Finance, David Bahati
Parliament’s Finance Committee has recommended to Government to desist from reviewing tax legislation annually to create stability for investors.
MPs now want Government to review taxes at least every after three years.
While tabling report on Income Tax Amendment Bill 2021, Henry Musasizi, the Chairperson Finance Committee said that the annual reviews of tax laws has created unstable environment for investors with calls to harmonise reviews.
“The Committee recommends that Government considers review of tax legislation from annually to at least three years. This is meant to ensure predictability to investors in decision making,” said Musasizi.
Michael Mawanda (Igara East) backed the Committee report, saying there is need to give enough time to investors to adjust to taxes.
He said some investors base their decisions on tax reviews but once these are amended, the business people end up being disorganized.
The Ministry of Finance proposed amendments to Clause 4 so as to provide for an income tax exemption for agro-processors by introducing additional sectors to the list of strategic sectors qualifying for the ten-year income tax incentive.
Among those include; manufactures of chemicals for agricultural and industrial use, textiles, glassware, leather products, industrial machinery and electrical equipment, sanitary pads and diapers.
Minister David Bahati, State Minister for Planning said the tax exemption is meant to encourage investment in the specified sectors.
Government also proposed a ten-year income tax exemption for a manufacturer whose investment capital is at least fifty million United States Dollars.
Musasizi told Parliament that over the past three years, there have been varying tax exemptions/incentives to investors and there is need to further study the various tax exemptions being offered to create certainty and predictability in doing business
However, Muhammad Nsereko (Kampala Central) warned Government dishing out incentives to foreign investors and burdening Ugandans with taxes because the same exemptions aren’t given to local investors.
“Government should give us an inventory on all those that have been taxed before. Reject this clause in its entirety so we encourage people to pay VAT knowing they are playing on leveled field. After these exemptions expire, the investors wind up and leave. Let it be clear not blank check,” he said.
State Minister for Finance, David Bahati defended the tax exemptions saying that Uganda is living in a very competitive world and that nations across the East African region are competing for these investors.
“We don’t want these people to go to other countries. We have already given tax exemptions, we want other sectors to benefit,” said Bahati.
Musasizi also backed Government saying, “It is true tax exemptions have been abused in the past, but that doesn’t mean all investors aren’t adding value to this economy. Taxation is used to negotiate better business environment. We are in competition, we aren’t the only economy, investors are looking at what countries have to offer.”