Parliament has approved several government proposed new tax measures in the financial year 2017/2018 budget.
According to the report presented by the Parliament’s Budget committee, VAT on wheat grain has been reinstated.
The government is expected to raise Shs 30bn from this tax.
The VAT on animal feeds and premixes (advanced feed ingredients for animals) has been exempted and the government is to lose Shs 7.4bn from the new development.
Crop extension services and irrigation equipment have also been exempted from VAT and the revenue loss to government is Shs 2bn and 1bn respectively.
Parliament however didn’t approve the government’s proposed VAT exemption for tourist arrangement services, access to tourist sites, tour guide and game driving services.
The government was expected to lose Shs 4.3bn from exempting VAT on tourism business.
The VAT exemption on solar batteries and lanterns has been approved and the revenue loss of Shs 2bn is to be registered.
The government has also exempted menstrual caps from VAT.
One of President Yoweri Museveni’s pledges in the 2016 campaigns was distribution free sanitary pads to school going girls but the resource envelope could not allow, according to Education Minister Janet Museveni.
Meanwhile, Parliament on its own exempted VAT on agriculture insurance premium. The financial implication of the exemption was not readily available on Wednesday.
The subtotal to be realized by government from the above 8 VAT changes is Shs 12.8bn.
The government has imposed 15 percent withholding tax on winning forms and gambling. The new tax obligation on gambling is to raise Shs 8bn.
The deduction on allowance for initial investments outside a radius of 50km from Kampala city has been reintroduced. The government is to lose Shs 33.2bn in the process.
Bujagali Hydropower Project has been granted income tax holiday for five years.
Government originally wanted 15 years income tax holiday for Bujagali that would run up to 2033 but Parliament revised it to a five-year waiver on corporation tax levied on the company’s profits.
The tax waiver was seen as crucial in realizing low electricity tariffs starting July 1, 2017.
Government is set to lose Shs 80bn in the Bujagali tax holiday and it’s the biggest loss in the 2017/2018 tax measure enhancements.
Parliament also on its own exempted savings and credit cooperative society from income tax for 10 years till June 30, 2027.
The subtotal revenue realization from income tax holiday is the loss of Shs 105.2bn.
The government wanted to remove the excise duty on confectionaries but Parliament rejected the move.
The removal would have made the government lose Shs 4.2bn.
The excise duty on locally manufactured furniture made from local materials has been removed and government is to lose Shs 390m.
The excise duty regime for beers, spirits, wine and soft drinks including juice have been revised and government is set to realise Shs 32.46bn from the enhancement.
The excise duty on cigarettes soft cap has been increased by Shs 10,000 from Shs 45,000 to Shs 55,000 and Shs 3bn is to be raised from the increase.
The subtotal to be realized from the excise duty enhancement is 30.37bn.
The government has reinstated 10 percent import duty on crude palm oil and Shs 50bn is to be realized from it.
Cement clinkers (ashes) has been removed from the list of raw materials exempted from custom duty and government is to realize Shs 6bn from the new changes.
The scope of infrastructure levy has been expanded and it is to generate Shs 197bn.
The import duty on penstock pipes for hydroelectric projects has also been exempted and Shs 12bn is to be lost.
The subtotal from import duty enhancements is Shs 241bn.
Non Tax Revenue
The government has revised non-tax revenue for firearms and Shs 2bn will be realized from civilians or non-state actors owning guns.
The royalty rate for limestone, chalks and gypsum under the Mining Act has been varied from Shs 10,000 to Shs 5,000 and Shs 2.5bn is to be lost.
Local service tax has been included to the non-tax revenue list in the new URA amendment and government is to raise Shs 5bn from it.
The grand total for 2017/2018 VAT, excise duty, customs and non-tax revenue enhancement is Shs 184.47bn.