2021/2022 BUDGET: Govt scraps OTT, introduces new taxes on airtime, data, rental income

The government of Uganda has announced the introduction of new taxes so as to shore up revenues that will finance the new budget for Financial Year 2021/2022.

Amos Lugoloobi, the newly appointed State minister for finance in charge of Planning, who presented the 2021/2022 financial year budget on Thursday, 10 June 2021 said domestic revenue for next financial year is projected at Shs22.425 trillion, equivalent to 13.8% of GDP, compared to a projected outturn of Shs19.432 billion, equivalent to 13.1% of GDP in FY 2020/21.

“Accordingly, I will highlight some tax policy interventions which will be implemented in Financial Year 2021/22: i. Reform taxation of rental income to remove the incentive for non-individual rental taxpayers to claim unrestricted deductions which significantly reduce their tax contribution. ii. Reduce rates of depreciation for some classes of assets, and iii. Discontinue the concurrent deduction of initial allowances and depreciation in the first year of use of qualifying assets,” he said.

Mr Lugoloobi added that the government will review the capital gains tax regime by allowing for the effect of inflation and providing tax relief for venture capital investments and broaden the scope of taxation of plastics to cover all plastics.

He also said government will rationalize the Excise Duty regime on telecommunication services by scrapping the excise duty on Over the Top (OTT) and introduce a harmonized excise duty rate of 12.0% on airtime, value-added services and internet data excluding data for provision of medical services and the provision of education services.

In the same vein, the minister said will introduce an export levy of 7% on the value of fish maw exports and Impose an export levy of 5% and 10% on processed and unprocessed gold and other minerals respectively.

To boost revenue collection, Mr Lugoloobi said the Uganda Revenue Authority will strengthen tax arrears management and recovery, enhance data analysis through interfaces with other Government information systems to enhance taxpayer compliance and enforce tax compliance using the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) and Digital Tax Stamps;

He added they will enforce enhanced licensing requirements for clearing and tax agents, and bond operators, improve detection of smugglers using non-intrusive inspection equipment, and Close all bonded houses for imported sugar for re-export to avoid undeclaration and misclassification.

These administrative measures will generate about Shs. 800 billion in revenue collections.

“Mr. Speaker, the capacity of local governments to collect revenue will be enhanced through training and ICT infrastructure,” he said.