Parliament adopts new tax measures

Parliament has passed new measures in the Stamp Duty Amendment Bill, 2020 and dropped harsh provisions.
Also processed was the Tobacco Control Bill, 2020 in which lawmakers rejected the $0.8 levy on processed tobacco leaf.
Under stamp duty, the House voted to drop the provision of a 0.5 per cent tax levy on mortgages. Basing on a report of the Committee on Finance, the MPs indicated that, “it is unfair for a person borrowing to lose 0.5 per cent of the loan value to stamp duty yet they already have financial difficulties.”
The House, however, accepted to adopt a Shs100,000 annual tax on professional services. Mr Henry Musasizi, the chairperson of the committee, convinced the House on grounds that there is need to widen the tax basket for the government to regenerate revenue.

“The licence fees we pay are not tax and this stamp duty we are talking about goes to the body and thus to the consolidated fund. As we know, nobody would be willing to pay tax but we should also appreciate the value, taxes contribute to the economy and that is why we are saying that as a professional, doing away with Shs100,000 annually cannot throw you out of practice,” said Mr Musasizi.
The House, however, modified the law to emphasise employment of Ugandans by all investors, including those in industrial parks and free zones.
To achieve this end, the lawmakers voted to relax minimum capital requirement for local investors to $300,000 or $150,000 (for those investing upcountry.)
Minimum investment capital for foreigners is maintained at $10m.
However, all investors will be required to meet an additional employment requirement of 70 per cent citizens in skilled labour and 70 per cent of total salary budget for a particular financial year.

Upcountry means areas outside Kampala, Wakiso, and Entebbe.
This implies that the new law will read under Section 60 A (b)(i) this, “a minimum investment capital of $10m in the case of a foreigner or $300,000 in case of a citizen; or $150,000 for a citizen whose investment is placed upcountry.”
Two justifications were given; one, “to ensure that this benefits a larger proportion of the local economy. This can also be instrumental in enhancing and strengthening forward and background linkages between the free zones and or industrial parks and Uganda’s farmers, who comprise 80 per cent of the local economy.”

The second justification is to “encourage development and investment in the rural areas as opposed to concentration of investments in the towns.”
The House also adopted amendments in the Tobacco Control (amendment bill) 2020, where they imposed a $0.8 levy on every kilogram of unprocessed tobacco leaf. Processed tobacco is exempt from tax.
The House resumed yesterday to debate the Amendments under Income Tax, Excise Duty and Value Added Tax.

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