Govt suspends Double Taxation pacts

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Posted  Friday, June 6   2014 at  01:00

In Summary

Reason. Move comes from the need to have clearer guidelines on how the country will benefit from such agreements.


Government has suspended negotiations on Double Taxation Agreements (DTAs) after it emerged that the country’s interests and priorities contained in most of those treaties are not usually clearly stated.

Double taxation is the levying of tax by two or more authorities on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). This double liability is often mitigated by tax treaties between countries.

The purpose of the DTAs between two tax authorities of two countries is to enable them eliminate double taxation.

Clear guidelines
According to the Commissioner for tax policy at the Ministry of Finance, Planning and Economic Development, Mr Moses Kaggwa, suspension of the agreements comes from the need to have a clearer guideline in terms of how the country can benefit from such pacts once signed.

“We have stopped negotiations of any new agreement until we have a policy in place that will not only offer guidelines but give clear priorities of what our interests and objectives are,” Mr Kaggwa told participants who attended a two-day East African regional workshop organised by Southern and Eastern Africa Trade Information and Negotiation Institute (SEATINI) and Action Aid in Kampala recently.

He continued: “We are working on policy outcomes that will be good for the country. We are trying to avoid a situation where we enter into an agreement without clear position.”

Mr Kaggwa, however, gave assurance that the policy will promote investment without compromising the country’s ability to collect revenue, and the model that will be eventually adopted will take into consideration other best practices that have been tried and tested elsewhere.

Ms Jane Nalunga, the SEATINI Uganda country director, said for years, they (civil societies advocating for better trade deals) have been calling for a policy framework that guides all negotiations that the country is engaged in.

She said: “We must know what we need to achieve in all these negatiatons because those who we negotiate with (for example the EU) already know what they want from us and they will do anything to make sure they protect their interests—be it access to raw material or market.”

She continued: “We can begin with our own model, then the EAC and ultimately an AU model.”

Representing Agenda Participation 2000 Policy Forum from Tanzania, Mr Moses Kulaba, said DTAs are delicate areas to navigate because of heavy political interest that it tends to generate because of the stakes involved.

In a separate interview, Mr Kaggwa said by July, the new polices to guide fresh DTAs negotiation will be before Cabinet for endorsement. But for the meantime, his ministry has a temporary model that they use as the process to have a substantive one is being expedited.

The EA regional tax meeting held in Entebbe last week was aimed at enhancing domestic resources mobilisation for sustainable development across the region.
them to remit corporation tax.”

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