KAMPALA –UGANDA —Economists and Tax Experts have advised Uganda government to stop offering tax incentives to multinational investors.
“These incentives are given because we think they bring investments. What we have found is that they (tax incentives) rate number 13 and 14 on the priority list of international businesses when an investor decides to invest. If they [investors] are coming for oil, gold or coffee, they will still come because these things are here already. You don’t have to pay them,” said Logan Wort the Executive Secretary of African Tax Administration Forum.
Wort said Government should focus on improving the business environment through developing infrastructures and improving on the tax regime system, which he says will attract more investors.
Wort thinks that the government should centralize the task of domestic revenue collection to tax body Uganda Revenue Authority (URA) in order to increase efficiency and cut on costs.
Wort, who was attending the 10thURA OPEN Minds Forum, said most African countries are losing millions dollars of tax through Tax incentives Uganda being included on the list.
He said, Africa as continent, loses about US$ 38.6 billion in revenue annually through wasteful tax incentives, which affects the widening of tax bases in most developing economies like Uganda.
Dr Joseph Muvawara, the Executive Director of National Planning Authority (NPA) said for Uganda Revenue Authority to collect more revenue from the general public especially domestic revenue, the government must Centralize Revenue Collections as opposed to the current situation where every Government agency collects Non Tax revenue.
“The current situation under which both domestic and Non Tax revenues are mobilized from the public is challengeable.
“One every government agency collects money from the public but on many occasions such dues are not transferred to the consolidated fund at the Bank of Uganda due to many leakages.
“Government through parliament should empower URA to be the single revenue collector in Uganda,” said Muvawara.
Currently Government Autonomous agencies such as Kampala Capital City Authority collects Non Ta revenues such as Trading Licenses, National Drug Authority collects dues from Pharmaceutical drugs for operating Licenses among other Government agencies.
Muvawara observed that Uganda’s tax to GDP ratio stands at 15.5%, the lowest in the East African region situation which may affects Government towards raising funds to finance its budget but the Executive Director pointed out that if all the leakages in tax collection are closed URA has the capacity to mobilize domestic from the general public.
The 10thOpen Minds forum was held at the time when the country is experiencing a decline in International trade taxes and hence increasing reliance on domestic mobilized revenue for sustainability. In this financial year URA is expected to mobilize revenue resources at the tune of about 15 trillion shillings in the financial year 2017/2018 if government is to finance the 29 Trillion budgets for the financial year2017/2018.
URA commissioner General Doris Akol said for Uganda to achieve the Middle Income status by 2020 revenue mobilization need to grow in tandem with government expenditure needs which is still big challenge where majority of the business are of informal sector.
Participants in the forum advised government to invest more resources in the value addition chain especially in the Agriculture sector this will support government to increase on her exports thus earning more from the sector.
