Kampala, Uganda | THE INDEPENDENT | The Minister of Finance, Matia Kasaija has tabled before parliament 12 tax related bills under which government proposes several budget measures for the coming financial year 2021/2022.
The tax bills tabled by Kasaija include the Excise Duty (Amendment) Bill, 2021, The Fish (Amendment) Bill, 2021, The External Trade (Amendment) Bill, 2021, The Income Tax (Amendment) Bill, 2021, The Mining (Amendment) Bill, 2021, The Stamp Duty (Amendment) Bill, 2021.
Speaker Rebecca Kadaga directed that Parliament’s Finance Committee considers the Bills expeditiously and reports back. Parliament expects to complete the budget process for the 2021/2022 financial year budget before the 11th Parliament starts on 20th May. (click on PWATCH-UG graphic to show bills become an act)
Income Tax Under the Income Tax (Amendment) Bill, 2021, government proposes that landlords earning rental income from more than one rental property account for the income and expenses on each property separately.
This proposal by government to compel landlords and companies with more than one property to declare the income from each asset separately was in 2019 rejected by Parliament.
The proposal was meant to catch landlords who hide behind making losses to evade taxes and the proposal means that property owners would no longer be able to offset losses from one property using the profits of another. Through this tax reform, government expected to collect 7 billion Shillings.
The Finance Committee report then tabled by the Chairperson Henry Musasizi rejected the proposal saying that even when the government proposal is intended to streamline the collection of rental tax and reduce revenue loss to government, it would increase the compliance burden on the property owners.
“It will be costly and complicated for companies or corporations like National Housing and Construction Company Ltd or National Social Security Fund who own several properties to file separate returns for each property,” read the Finance Committee report.
Francis Kamulegeya, the Senior Partner at PWC also then argued that the tax measure would distort the taxation of companies involved in rental property by forcing them to treat each property as if it is separate business.
Currently, land lords or a company sums up all the monies earned from rent in different properties and once the rental income doesn’t exceed Shillings 2.8 million thresholds after deducting the 20 percent allowable expenses, the property is exempted from taxes.
Meanwhile, the Income Tax (Amendment) Bill, 2021 according to audit firm- PricewaterhouseCoopers (PwC) also proposes to increase the rental tax rate for individuals from 20 percent to 30 percent similar to that of non-individuals and allow landlords to deduct 60 percent of rental income as notional expenses in calculating chargeable income.
Stamp Duty Also under the Bill, new manufacturers with an investment capital of at least US Dollars 50 million and existing manufacturers with an additional investment of US Dollars 50 million will benefit from the proposed Stamp Duty Amendment Bill, 2021.
PwC says that instruments such as debentures, leases, transfer of land and others will have a NIL stamp duty rate.
External Trade (Amendment) Bill, 2021 Government proposes a levy of US Dollars 0.4 per Kilogram to be charged on wheat bran, cotton cake, maize bran and other by-products of the milling industry exported out of Uganda under the External Trade (Amendment) Bill. The levy if approved will be paid by exporters to Uganda Revenue Authority (URA) at the customs point.
Traffic and Road Safety (Amendment) Bill, 2021 Government proposes under the Traffic and Road Safety (Amendment) Bill, 2021 that effective 1st July, 2021, a person owning a motor vehicle, trailer or engineering plant will use it on the road only if it’s licensed under the Traffic and Road Safety Act.