24th August 2008 ( New Vision)
HOTEL investors have asked the Government to immediately suspend the local service tax to save them from "double taxation".
Showing posts with label Uganda. Show all posts
Showing posts with label Uganda. Show all posts
Sunday, August 24, 2008
Tuesday, August 12, 2008
Uganda: Dealing With Taxation Issues in a Partnership
12 August 2008(Allafrica.com)
This is the third in series of my articles for this column discussing the common structures of doing business in Uganda, and the respective tax implications of each of the structures. In this article, I will look at the tax implications of trading as a partnership..
This is the third in series of my articles for this column discussing the common structures of doing business in Uganda, and the respective tax implications of each of the structures. In this article, I will look at the tax implications of trading as a partnership..
Wednesday, July 23, 2008
Treasury chief urges on taxes
23rd July 2008 (The Monitor)
“It’s incumbent upon those who formulate our taxation policies and the pillar of this economy to exercise prudence, fairness in narrowing the often wide gap between the rich and very poor,” said Deputy Secretary to the treasury, Mr Keith Muhakanizi while presenting a key note address at a Uganda Debt Network (UDN) public dialogue held at Hotel Africana Friday July 18.
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“It’s incumbent upon those who formulate our taxation policies and the pillar of this economy to exercise prudence, fairness in narrowing the often wide gap between the rich and very poor,” said Deputy Secretary to the treasury, Mr Keith Muhakanizi while presenting a key note address at a Uganda Debt Network (UDN) public dialogue held at Hotel Africana Friday July 18.
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Monday, July 21, 2008
Uganda: Kacita Complains of High Tax Burden amidst Narrow Base
21 July 2008 (Allafrica.com)
THE finance ministry has failed to widen the tax base but has increased the tax burden, Issa Ssekitto, the Kampala City Traders Association's (KACITA) spokesman, has said. Referring to the new local service tax, he said:" It is just a duplication of Pay As You Earn and income tax but won't increase tax revenue
THE finance ministry has failed to widen the tax base but has increased the tax burden, Issa Ssekitto, the Kampala City Traders Association's (KACITA) spokesman, has said. Referring to the new local service tax, he said:" It is just a duplication of Pay As You Earn and income tax but won't increase tax revenue
Monday, May 26, 2008
Uganda_ Flower sector to get ten-year tax holiday
May 26, 2008
Investors in the ailing flower sector are counting their fortunes as government moves to strengthen the sector with attractive incentives.The President has directed the investment minister to introduce a ten-year tax holiday in the next financial budget.
Investors in the ailing flower sector are counting their fortunes as government moves to strengthen the sector with attractive incentives.The President has directed the investment minister to introduce a ten-year tax holiday in the next financial budget.
Wednesday, March 19, 2008
Uganda: Local Service Tax; It's Double Burden
19 March 2008- (Allafrica.com)
The 2007/08 budget introduced a new tax called Local Service Tax. The tax is provided for in the Local Government Act (Amendment) Bill 2007 now before Parliament. The tax has sparked mixed reactions with protest from workers.
The 2007/08 budget introduced a new tax called Local Service Tax. The tax is provided for in the Local Government Act (Amendment) Bill 2007 now before Parliament. The tax has sparked mixed reactions with protest from workers.
Tuesday, January 15, 2008
Uganda country Report
January 2008 (Institute of Policy Research & Analysis)
The Uganda Revenue Authority (URA) was established in September 1991 as an autonomous agency to administer Central Government taxes...URA was an attempt to integrate central government taxes under one management, and to improve revenue collection through enhanced autonomy, acquisition of skilled staff, increased integrity and effective use of automated system.
The Uganda Revenue Authority (URA) was established in September 1991 as an autonomous agency to administer Central Government taxes...URA was an attempt to integrate central government taxes under one management, and to improve revenue collection through enhanced autonomy, acquisition of skilled staff, increased integrity and effective use of automated system.
Thursday, December 20, 2007
Taxation in Uganda
20th December 2007 (Institute of Policy Research & Analysis)
The fiscal policy of Uganda Government focuses on stimulating economic growth, strengthening
tax administration and raising tax revenue. Ultimately, government aims at reducing fiscal deficit in
relation to GDP, which is often financed by foreign inflows in terms of budget support.
The fiscal policy of Uganda Government focuses on stimulating economic growth, strengthening
tax administration and raising tax revenue. Ultimately, government aims at reducing fiscal deficit in
relation to GDP, which is often financed by foreign inflows in terms of budget support.
Friday, November 2, 2007
Uganda: Sh1.6 Trillion Waiver May Kill Tax Compliance
(The Monitor)
Last week, Daily Monitor published a list of 42 enterprises that owe government over Shs1,600b. It has also been reported that government is contemplating forgiving the debts. Whereas details regarding how and for what purposes the enterprises accessed the money are not clear, the issue needs to be critically examined.
I'm particularly interested in assessing the possible effect such spending of taxpayers' money has on the taxpayers' morale to pay taxes. I refer to a research publication on the internet titled: The effects of tax morale on tax compliance: Experimental and survey evidence by Ronald G. Cummings, et al.
Tax morale is defined as the intrinsic motivation to pay taxes from the moral obligation to pay taxes or the belief in contributing to society by paying taxes. The above publication contains interesting findings and below are some extracts.
"The experimental and survey results reported in the paper supported the hypothesis that tax compliance increases with the individual perceptions that the tax system is fair and that the government is providing valued goods and services with the revenues...."
"The perceived quality of political institutions is argued to affect taxpayers' willingness to pay taxes. If taxpayers perceive that their interests (preferences) are properly represented in political institutions, and they receive a desirable mix of public goods, their willingness to pay taxes increases. On the other hand, a state in which corruption is rampant is one in which citizens have little trust in authority and thus a low incentive to cooperate."
"A more encompassing and legitimate state will lead to higher tax compliance. Such a state may tend to increase taxpayers positive attitudes and commitment to the tax system, with an accompanying positive effect on tax compliance.
Taxes are the price paid for government services and taxpayers generally are sensitive to the way government uses tax revenues. Taxpayers perceive their relationship with the state not only as a relationship of coercion, but also as one of exchange. Individuals will feel cheated if taxes are not spent efficiently".
From the above, it is clear that for a government to achieve high compliance levels, it must be accountable. Taxpayers must be informed of how their taxes are being used by government. Where they feel the government is not properly using their taxes, there are chances that they will not cooperate hence tax contributions will be low.
We must not forget that previous media reports indicated that Uganda is among the countries with the least tax compliance levels. Whereas government is seeking to increase tax collections to reduce the deficit budget, deriving from the above findings, you will expect such government spending to discourage tax compliance.
The findings give good insights into the causes of non- tax compliance in Uganda. If government expects voluntary compliance, then it should be accountable. Simple. It is hard to tell how many people felt cheated, deprived and hopeless after reading the above story.
Imagine one pays; 30 per cent of salary (PAYE); 18 per cent on all goods that attract VAT, excise duty of 12 per cent on airtime and Shs850 per litre of petrol, among other taxes, yet most of the benefiting companies do not pay a penny in corporation tax since they are not profitable any way. But they receive a fortune out of someone else's sweet.
What makes matters worse, there is no clear policy regarding the bailouts to business people as to how they are determined, their recovery or otherwise. The government is obliged to explain to taxpayers how their money is used if it is to gain their cooperation.
Voluntary compliance is very important as the above publication indicates that enforcement alone will not do much in attaining tax compliance. "... compliance does increase with enforcement effort but the effect is less where the tax regime is viewed as unfair. Thus the results reported in this paper provide support for a model of tax compliance that extends beyond the typical 'economical crime' approach with its emphasis on enforcement effort and deterrence.'
The benefits of voluntary compliance need not to be over emphasised. It ensures higher revenues at least cost, which is every tax collector's dream. It is important that the matter of the Shs1,600b is handled logically or else it may encourage taxpayers to award themselves 'bailouts' before the money reaches the treasury. And this would be to the government's disadvantage.
(The writer is an associate consultant at Q-Sourcing Limited. He has over 10 years experience in taxation having worked with URA and Ernst&Young)
Last week, Daily Monitor published a list of 42 enterprises that owe government over Shs1,600b. It has also been reported that government is contemplating forgiving the debts. Whereas details regarding how and for what purposes the enterprises accessed the money are not clear, the issue needs to be critically examined.
I'm particularly interested in assessing the possible effect such spending of taxpayers' money has on the taxpayers' morale to pay taxes. I refer to a research publication on the internet titled: The effects of tax morale on tax compliance: Experimental and survey evidence by Ronald G. Cummings, et al.
Tax morale is defined as the intrinsic motivation to pay taxes from the moral obligation to pay taxes or the belief in contributing to society by paying taxes. The above publication contains interesting findings and below are some extracts.
"The experimental and survey results reported in the paper supported the hypothesis that tax compliance increases with the individual perceptions that the tax system is fair and that the government is providing valued goods and services with the revenues...."
"The perceived quality of political institutions is argued to affect taxpayers' willingness to pay taxes. If taxpayers perceive that their interests (preferences) are properly represented in political institutions, and they receive a desirable mix of public goods, their willingness to pay taxes increases. On the other hand, a state in which corruption is rampant is one in which citizens have little trust in authority and thus a low incentive to cooperate."
"A more encompassing and legitimate state will lead to higher tax compliance. Such a state may tend to increase taxpayers positive attitudes and commitment to the tax system, with an accompanying positive effect on tax compliance.
Taxes are the price paid for government services and taxpayers generally are sensitive to the way government uses tax revenues. Taxpayers perceive their relationship with the state not only as a relationship of coercion, but also as one of exchange. Individuals will feel cheated if taxes are not spent efficiently".
From the above, it is clear that for a government to achieve high compliance levels, it must be accountable. Taxpayers must be informed of how their taxes are being used by government. Where they feel the government is not properly using their taxes, there are chances that they will not cooperate hence tax contributions will be low.
We must not forget that previous media reports indicated that Uganda is among the countries with the least tax compliance levels. Whereas government is seeking to increase tax collections to reduce the deficit budget, deriving from the above findings, you will expect such government spending to discourage tax compliance.
The findings give good insights into the causes of non- tax compliance in Uganda. If government expects voluntary compliance, then it should be accountable. Simple. It is hard to tell how many people felt cheated, deprived and hopeless after reading the above story.
Imagine one pays; 30 per cent of salary (PAYE); 18 per cent on all goods that attract VAT, excise duty of 12 per cent on airtime and Shs850 per litre of petrol, among other taxes, yet most of the benefiting companies do not pay a penny in corporation tax since they are not profitable any way. But they receive a fortune out of someone else's sweet.
What makes matters worse, there is no clear policy regarding the bailouts to business people as to how they are determined, their recovery or otherwise. The government is obliged to explain to taxpayers how their money is used if it is to gain their cooperation.
Voluntary compliance is very important as the above publication indicates that enforcement alone will not do much in attaining tax compliance. "... compliance does increase with enforcement effort but the effect is less where the tax regime is viewed as unfair. Thus the results reported in this paper provide support for a model of tax compliance that extends beyond the typical 'economical crime' approach with its emphasis on enforcement effort and deterrence.'
The benefits of voluntary compliance need not to be over emphasised. It ensures higher revenues at least cost, which is every tax collector's dream. It is important that the matter of the Shs1,600b is handled logically or else it may encourage taxpayers to award themselves 'bailouts' before the money reaches the treasury. And this would be to the government's disadvantage.
(The writer is an associate consultant at Q-Sourcing Limited. He has over 10 years experience in taxation having worked with URA and Ernst&Young)
Tuesday, September 11, 2007
Tax Evasion in Uganda
11th September 2007 (The Monitor)
ONE the biggest problem URA faces in enforcing tax administration in Uganda is tax evasion. Tax evasion is the failure to pay taxes that are legally due. Evasion of taxes on gains and profits takes place when taxpayers do not declare their gains and profits to tax authorities or do not declare the full amounts. Evasion of import duties, excise duties and VAT taxes occurs when taxpayers do not declare imports or locally manufactured products or do not declare the full amounts, or when they under-value imports and locally manufactured products. I am not aware of any available statistics relating to the tax gap in Uganda, but I believe it could be as high as 50 per cent. The tax gap is the difference between the tax that the URA should collect from all eligible taxpayers in the country, and what they actually collect from the few that are compliant. This tax gap arises mainly as a result of taxpayers failing to file their tax returns, underreporting or understating their income, and in some case as a result of complete failure to pay what is genuinely owed to the URA. The biggest culprits as far as tax evasion is concerned in Uganda are mainly the traders and businesses in the informal sector of the economy. This sector is characterised mainly by cash transactions. One of the ways in which URA can work towards the reduction of the tax gap in Uganda is by bringing the informal sector into the country's tax net. The question is how can URA achieve this? The nature of the activities undertaken in the cash economy makes it difficult to quantify its size and impact on tax revenue. However, there is sufficient evidence to conclude that tax evasion by participants in the cash economy is a significant problem that denies the government billions of shillings in revenue each year. Revenue that could be funding improvements in welfare, health, education, infrastructure and other government programs. In order for URA to address the challenges presented to it by the cash economy and ultimately bridge the tax gap, a new tax administrative approach may be necessary. The cash economy may have to be addressed in a different tax compliance model from the formal business sector. This model could include an approach to compliance improvement, which encourages voluntary compliance by the community through a more cooperative and participative regulatory environment. Mr Kamulegeya is a tax partner at PricewaterhouseCoopers
ONE the biggest problem URA faces in enforcing tax administration in Uganda is tax evasion. Tax evasion is the failure to pay taxes that are legally due. Evasion of taxes on gains and profits takes place when taxpayers do not declare their gains and profits to tax authorities or do not declare the full amounts. Evasion of import duties, excise duties and VAT taxes occurs when taxpayers do not declare imports or locally manufactured products or do not declare the full amounts, or when they under-value imports and locally manufactured products. I am not aware of any available statistics relating to the tax gap in Uganda, but I believe it could be as high as 50 per cent. The tax gap is the difference between the tax that the URA should collect from all eligible taxpayers in the country, and what they actually collect from the few that are compliant. This tax gap arises mainly as a result of taxpayers failing to file their tax returns, underreporting or understating their income, and in some case as a result of complete failure to pay what is genuinely owed to the URA. The biggest culprits as far as tax evasion is concerned in Uganda are mainly the traders and businesses in the informal sector of the economy. This sector is characterised mainly by cash transactions. One of the ways in which URA can work towards the reduction of the tax gap in Uganda is by bringing the informal sector into the country's tax net. The question is how can URA achieve this? The nature of the activities undertaken in the cash economy makes it difficult to quantify its size and impact on tax revenue. However, there is sufficient evidence to conclude that tax evasion by participants in the cash economy is a significant problem that denies the government billions of shillings in revenue each year. Revenue that could be funding improvements in welfare, health, education, infrastructure and other government programs. In order for URA to address the challenges presented to it by the cash economy and ultimately bridge the tax gap, a new tax administrative approach may be necessary. The cash economy may have to be addressed in a different tax compliance model from the formal business sector. This model could include an approach to compliance improvement, which encourages voluntary compliance by the community through a more cooperative and participative regulatory environment. Mr Kamulegeya is a tax partner at PricewaterhouseCoopers
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