Government to scrap tax on Bibles, Korans in July

Kampala. The government will continue collecting taxes on Bibles, Korans and other liturgical books until an ongoing amendment of the Value-Added Tax (VAT) Act to exempt the items is concluded, officials said yesterday.

A Bill containing a raft of proposals, among them one on adding supply of Bibles and Korans to the list of tax-exempt items, is due for consideration by Parliament and government officials expect the process expedited by next month.
This, if done, would mean no taxes on the religious books by the next Financial Year, which starts on July 1.

Technocrats and a minister presented differing opinions in multiple public responses to this newspaper’s lead story published yesterday, which reported on a Uganda Revenue Authority (URA) decision to tax the religious materials.
This departure from a long-standing practice, and not the law, triggered an avalanche of criticism by various faith groups, with an Inter-Religious Council of Uganda official branding it “erroneous”.

Although these items were not tax-exempt under the second schedule of the VAT Act, URA for unexplained reasons had not been imposing the levies until April, this year, when it tasked Church of Uganda to pay Shs8.9m on a consignment of 9,120 Bibles, prayer and hymn books imported from Kenya.

Ms Doris Akol, the URA commissioner general, in an April 19, 2018 letter informed Church of Uganda Archbishop Stanley Ntagali that the practice of not collecting taxes on religious materials had been an “anomaly”. “Bibles, prayer and hymn books attract VAT at the standard rate of 18 per cent because the law does not exempt them from VAT and the commissioner general has no authority under the law to waive tax imposed by the law,” Ms Akol informed the prelate, who had sought a tax waiver.

After Daily Monitor broke the story, the URA boss tweeted that “we are actually proposing to exempt them (religious materials) from tax. Ref. VAT Amendment Bill, 2018”.
URA in a separate statement said “a proposal has been made in the VAT Amendment Bill, 2018, to exempt religious and other educational materials, effective July 1, 2018”.

“This decision can only be effected after approval from Parliament,” Mr Vincent Seruma, the URA assistant commissioner for Public and Corporate Affairs, noted, adding: “As URA, we pledge to continue to execute our mandate professionally and support this country to become a self-sustaining economy. Paying your taxes in the right amounts, and on time, will go a long way to enable us all achieve this goal.”

This newspaper’s story was based on URA’s revised practice to pick taxes on Bibles, Korans and other liturgical books, and not the proposed VAT Act amendments.
The matter of whether to tax religious materials or not yesterday became a separate talking point in Parliament and at the launch of the World Bank Group’s 11th edition of the Uganda Economic Update on financing growth and development.

The World Bank recommends, among other things, that Uganda should strengthen its tax system by reducing exemptions, broadening the tax base and tapping into hard-to-reach informal activities to lift taxable proportion of the Gross Domestic Product (GDP) from 14 per cent to 20 per cent.

This proposal comes in the wake of an aggressive move by the government to tighten the tax regime, including proposing new taxes on social media users, to muster more resources to wean the country off donors.

Speaking at the World Bank report launch, Ministry of Finance Permanent Secretary Keith Muhakanizi, citing this newspaper splash story yesterday, said:
“When you look at the headline, it states that [the] government is taxing the Bible and Koran, and people who are religious are panicking. As we talk of raising domestic revenue, everybody in Uganda from top politicians to religious leaders...and (religious) items should pay tax.”

READ:

Government slaps new tax on Bibles and Korans

Uganda Revenue Authority says their exception from Value Added Tax was an anomaly

He left shortly afterward.
State Finance Minister for Planning David Bahati, who spoke after Mr Muhakanizi had left, however, assured the same audience that the government had taken a decision not to tax religious materials, sparking murmurs from the crowd.

Minister Bahati is chairperson of Uganda Parliamentary Fellowship, according to his “special interests” entry in the 10th Parliament directory, and is a lead player in organising the annual National Prayer Breakfast.
Both he and PS Muhakanizi oversee and in principle provide strategic direction to guide URA operations.

The minister yesterday afternoon requested Speaker Rebecca Kadaga to allow him respond on the floor of Parliament to the tax-on-religious materials issue.
“The Daily Monitor headline indicated that the government is going to tax our Holy books; the Bible and the Koran. It is important that we inform Members of Parliament and the country at large because I know many religious leaders have been contacting us.” Mr Bahati said.
Additional reporting by Moses Kyeyune & Martin Lurther Oketch

[email protected]