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Thursday, October 6, 2022

Gov’t Moots Various Tax Amendments in New Financial Year

The government through the Ministry of Finance, Planning, and Economic Development has proposed various tax changes in the coming financial year.

According to Finance Ministry, the draft Bills with tax proposals include the Value Added Tax (Amendment) Bill, the Income Tax (Amendment) Bill, and the Excise Duty (Amendment) Bill, 2022.

Other amendments are; the Stamp Duty (Amendment) Bill, the Tax Procedures Code (Amendment) Bill, Tax Procedures Code (Amendment) Bill, the Finance Bill, 2022, and Uganda Revenue Authority (Amendment) Bill, 2022.

Tax Appeals Tribunal (Amendment) Bill, 2022, and the Traffic and Road Safety (Amendment) Bill, 2022 are also among the proposed amendments for the financial year 2022/2023 and are now available in the public domain.

Under the Value Added Tax (VAT), the Bill seeks to provide for VAT on imported services used by businesses making exempt supplies but it makes reference to a non-existent section in the law.

According to the proposed Income Tax Act (ITA) amendment, the Bill seeks to revise the definition of a beneficial owner and exempt organization.

In the proposal, the tax on rental income, the proposal seeks to reduce the rate of rental tax for individuals from 30% to 12%.

On the Excise Duty Act amendment proposal, the Bill shall ensure that the duty tax payable for opaque beer and locally produced non-alcoholic beverages is reduced.

It further proposes to charge duty on undenatured spirits depending on the alcoholic strength.

Under this same amendment, the bill seeks to reintroduce duty payable on polythene bags and sacks except for vacuum packaging bags for food, juices, tea, and coffee sacks and bags for direct use in the manufacture of sanitary pads.

On the Stamp Duty Act, the Stamp Duty (Amendment) Bill, 2022 proposes amendments to the Stamps Duty Act 2014 providing for the following changes.

The Bill also proposes to expand the reach of this stamp duty rate to all chargeable instruments in relation to the transfer of any property made by any writing including a transfer from a holder of letters of administration or probate orders to a beneficiary to a trust.

Currently, the Stamp Duty Act requires the new manufacturer to have investment capital of at least USD 50,000,000 and an existing one to make an additional investment of the same amount but the Bill seeks to reduce this capital investment to USD 35,000,000.

Under the Tax procedure code (Amendment) Bill, the registration of a tax agent is proposed to remain in force from the date of issue of the certificate of registration to 31st December every calendar year as opposed to running for 12-month duration from the date of registration.

The proposal shall also ensure a penalty is to be imposed for a taxpayer that fails to activate a tax stamp on the prescribed goods under the Act.

The Finance Act proposed amendment, the Bill intends to amend the Finance Act, 2016, the Finance Act 2015, the Finance Act, 2014, the Finance Act, 2013, the Finance (Amendment) Act, 2010, the Finance Act, 2009.

The Finance Act, 2008, the Finance Act, 2006, the Finance (No 2) Act, 2005, the Finance Act, 2005, and specifically repeal of the Finance Act, No 6 of 2012 shall also be amended in the proposal.

In the Traffic and Road Safety Act proposed amendment, the Bill proposes to impose an Environmental levy by reference to the year of manufacture of a motor vehicle as opposed to the date.

Under this same amendment, some powers of the Minister of Works and Transport to make regulations are to be repealed.

The Uganda Revenue Authority (Amendment) Bill proposes to grant the board of directors of URA the powers to appoint officers at the level of the assistant commissioner or higher and under The Tax Appeals Tribunal (Amendment) Bill 2022, the amendment proposes to increase the number of members of the tribunal from 5 (five) to 9 (nine).

The Bills are required to go through three different stages of Parliamentary deliberation before President can ascent to it into becoming the law and the commencement date for the proposed tax changes is 1st July 2022.

It should be noted that the process of a Bill, in any legislature worldwide does not start and end on the very day the Bill is passed in the plenary sitting of the House.

Prior to a Bill being presented for the First Reading, there are processes that the Executive goes through.

The said Bill is published in The Uganda Gazette accompanied by an explanatory memorandum setting out the policy and principles of the Bill, the defects in the existing law, if any, the remedies proposed to deal with those defects, and the necessity for the introduction of the Bill.

Upon completion, the said Bill is presented for First Reading by the line minister accompanied by a Certificate of Financial Implication from the Ministry of Finance.

This certificate indicates the estimates of revenue and expenditure over the period of not less than two years after the coming into effect of the Bill when passed.

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