What you need to know:
Tax gaps. This will help URA to plug the budget deficit created by donor aid cuts.
Banks have started collecting the 10 per cent Uganda Revenue Authority (URA) excise taxes with charges on some huge withdrawals, ledger fees, bulk transactions and other periodic charges set to increase.
During the Budget reading, Finance Minister Maria Kiwanuka said the Excise Tariff Amendments 2014 mandates all banks to collect and remit 10 per cent fees, which will help URA collect a projected Shs22 billion.
The 10 per cent tax on banking services which took effect in the new financial year (effective July 1, 2014), is one of the initiatives that URA has deployed in an effort to plug the Budget deficit created by donor aid cuts.
DFCU managing director Juma Kisaame said currently, banks are responding individually to the tax and it is upon a given bank to either increase charges such that the consumer bears the final cost or peg them on the banks which would then foot the bill on behalf of the customers, something he said is hard because banks are in business to make money.
“Ideally, 10 per cent is mandatory as per the amendments. It is upon the banks to absorb the costs as the banks have not carried out an in-depth analysis of the tax,” Mr Kisaame said.
He added: “1O per cent means when you deposit say school fees and the bank charge has been Shs2,000, you will need to add Shs200 for URA,” Mr Kisaame explained.
Crane Bank head of operations Peter Opio said those who carry out huge transactions will be burdened by this tax.
“When you are transacting Shs10,000, you will not feel the burden but look at someone who is banking Shs10 million. It becomes expensive for them. We tried to lobby URA to allow us three months to transit to the new tax but they did not yield to our pleas,” Mr Opio said.
Mr Fred Mugisha Bantu, the communications manager for Stanbic Bank, said the 10 per cent is not applicable to all transactions like small withdrawals and he allayed fears that every time one goes to the bank, he or she will be charged a 10 per cent on the transaction.
“10 per cent is not applicable to all transactions and some customers still can use electronic banking and mobile transfers which are not charged,” Mr Mugisha said.
Projected amount of money URA hopes to collect from the 10% tax.
URA’s revenue shortfall in the just-concluded financial year.