Government has proposed to increase taxes on wines, spirits, beers, airtime, SACCOs and money transfers in a bid to widen the revenue envelope and fix the ailing economy.
Tax bills that were tabled in Parliament last week indicate that the government is also proposing to tax SACCO’s, just a year after it had exempted them from paying taxes for the next 10 years.
President Museveni has also ordered the Finance Ministry to slap new taxes on social media platforms such as WhatsApp, Facebook, Twitter, Skype and Viber to stop what he called lugambo (gossip).
The tax targets on social media users are mooted to raise between Shs400 billion and Shs1.4 trillion.
It is unclear how the tax on social media platforms will be effected though Finance Ministry officials are expected to present to Parliament modalities on how Mr Museveni’s controversial tax proposals will be dealt with.
The bill also proposes that a taxpayer who has carried forward losses for a consecutive period of seven years of income shall pay a tax at a rate of 0.5 per cent of the gross turnover for every year of income in which the loss continues after the seventh year.
The income of a developer of an industrial park or free zone whose investment capital is at least $200m (Shs738b) for a period of 10 years from the date of commencement of construction will be exempted from tax.
Also to be exempted from tax is the income of an operator in an industrial park or free zone or other business outside the industrial park or free zone whose investment capital is at least $30m (Shs110.7b) in the case of a foreigner or $10m (Shs36.9b) in the case of a Ugandan citizen for five years from the date of commencement of business..
Mr Albert Baine, a tax expert with Global Taxation Services Ltd, warned that the government is making mistakes by moving away from the taxation canons.
He said while government is looking for quick fixes to raise money to run the economy, it is not looking at the impact of the proposals.
“You cannot tax my airtime I load and again tax services which I access out of the airtime loaded, that is double taxation,” Mr Baine said.
The bill also proposes that interest on a mortgage from a financial institution as expenditure incurred by an individual to acquire or construct premises that generate rental income will be an allowable deduction.
All the proposed taxes are however subject to Parliamentary approval.
A telecommunications service provider who makes a payment of a commission for airtime distribution or provision of mobile money services shall withhold tax on the gross amount of the payment at the rate prescribed in Part XII (10 per cent) of the Third Schedule.”