MPs approve income tax exemption for prosecutors, impose 15% tax on betting

Director of Public Prosecutions, Jane Frances Abodo appearing before the Finance committee at Parliament April 18, 2023. PHOTO | DAVID LUBOWA

What you need to know:

  • While defending her proposal before the Finance Committee two weeks ago, Ms Abodo revealed the tax exemptions would mean that the Uganda Revenue Authority (URA) loses at Shs6.8 billion.

Parliament has voted to impose a 15 per cent on betting winnings and also exempt the salaries of staff in the office of the Directorate of Public Prosecutions (DPP) from taxation.

The new tax changes are contained in the Income Tax Amendment Bill, 2023 passed during a plenary chaired by the Speaker of Parliament Ms Anita Among on Tuesday. The Director of the Public Prosecutions (DPP), Ms Jane Frances Abodo, recently told Parliament’s committee on finance that the proposal was meant to strengthen her office and avoid losing experienced staff to other related entities like the Judiciary.

While defending her proposal before the Finance Committee two weeks ago, Ms Abodo revealed the tax exemptions would mean that the Uganda Revenue Authority (URA) loses at Shs6.8 billion. This was different from the position of the Ministry of Finance that warned that the implementation of the said directive would cost the government Shs7.5 billion annual losses.

In his presentation, the Shadow Minister for Finance, Mr Muwanga Kivumbi said: “Exempting any given group of civil servants from paying tax on their employment income creates a non-neutral tax system, erodes the tax base and undermines tax morale. It will open floodgates whereby more people will request similar treatment.”

The same proposal was supported by the Leader of Opposition (LOP) Mr Mathias Mpuuga who reasoned that it would be fair if the House processed the tax exemption only after the office of the DDP concluded investigations that implicate some of legislators who that are processing the matter.

“For Justice's sake, one would opine that let the DPP first handle and conclude the files against the accused and then seek this exemption. It defeats all tenets of fairness where the accused are the very people to debate and decide either for or against the person investigating them on graft-related charges,” Mr Mpuuga said.

Similarly, legislators discarded the government's initial proposal that sought to levy a 5 per cent tax on all giant global entities offering digital services or products in Uganda. Opposition position that was later adopted by the whole house stated that the tax needed to be premised on an informed research and clear processes of how it would be implemented.

Kampala Central MP, Mr Muhamad Nsereko, said: “We did not conduct a survey, we were not given chance, given the time. We asked various questions of projections and adequate projections were not given to us. Honorable members when we are here to legislate on tax, we should make our countrymen aware, what is our projection from what we are imposing on to them…so that we are certain that we are introducing a tax based on facts and statistics.”

“The Ministry of Finance did not provide us with anything like so, we are just on a fishing expedition trying to hunt out for taxes wherever they are with no adequate knowledge. That is why I asked, who has the facts on how many people are having promotive advertisement, using digital platforms. How many know the users of data services?” He added.

The Income Tax Bill Amendment 2023, is part of the fresh amendments clustered in seven tax bills being processed for enactment for the next Financial Year effective July 1.

These include Income Tax Amendment, 2023, the Excise Duty Amendment Bill, 2023, the Value Added Tax Amendment Bill, 2023, and the Tax Procedures Code Amendment Bill, 2023. The others include Traffic and Road safety Act Amendment Bill, 2023 and Lotteries and Gaming Amendment Bill, 2023.