This has no headline
Jun 28, 2011
THE much anticipated 2011/12 budget came with unique opportunities for the business and industrial sector in Uganda.
By Olive Kigongo
THE much anticipated 2011/12 budget came with unique opportunities for the business and industrial sector in Uganda.
One; it coincided with the first year of the NDP (National Development Plan), and also the first year of the implementation of a new Government’s manifesto whose theme of “Promoting economic growth, job creation and improved service delivery†is in line with that of the budget that was read by the Minister of Finance.
From the stand point of the Chamber of Commerce and Industry, this, in general is an opportune moment for the business community to appreciate government commitment to invest in key sectors that promote business and trade, and therefore position themselves to think long term and grow their businesses.
The proposal by the Minister of finance to increase public investment in key infrastructure such as roads, railway transport, and the critical energy sector, will facilitate a sustainable and conducive business environment.
UNCI welcomes the Government’s continued support to the industry and manufacturing sector, with energy subsidies on power tariffs due to the expensive thermal power currently generated to fill in energy deficits.
Equipment on solar energy will also be VAT exempt. When the energy goal of production of 250 Megawatts is realised, the cost of production will definitely reduce tremendously.
We all know the effect of recent riots and terror attacks on the business sector operating in the city centre. The onus is on the Government that private sector business interests are secured and protected during such public protests.
Therefore the Government’s effort to ensure businesses operate in a secure environment, by the removal of import duty on security equipment for example, CCTV cameras, metal detectors etc should be applauded. It gives investor confidence to both local and international business interests.
The same security measures were embraced by all the other East African Community (EAC) member states in their budget for 2011/12.
The simplification of business registration services through a review of application for licenses, permits and other procedures, in an effort to remove processes that do not add value, remove duplication and introduce quick online registration, is certainly welcome.
This will enable a quick registration process for any potential investor, but also facilitate a bigger tax base by making it easy for business registration, and discouragement of illegal tax evasions by unregistered and unlicensed businesses.
On regional trade, the Ugandan business community needs to be made aware of the promise from the Minister of Finance to address the issue of double taxation that occurs where business operators have multiple business branches in the region.
The minister emphasised the need to have EAC agreements in place, to encourage regional trade.
It is possible that previously in the absence of these treaties, businesses have been taxed more than once on the same income or transaction. But with the new development, businesses shall definitely benefit because the arrangement will remove the possibility of being taxed twice.
To promote fair competition for local businesses, the 2011/12 budget framework also proposes transfer pricing regulations to shield local businesses from unfair competition from multinational business interests.
This is due to the fact that international businesses carryout business with subsidiaries and associated companies in different countries, and also due to the fact that the different governments compete to get a fair share of tax from these complex transactions.
The minister has indicated in her budget speech that the guidelines for transfer pricing regulations are being finalised.
The Commissioner general Uganda Revenue Authority (URA) already has the powers to tax transactions carried out by related parties at arms’ length but detailed guidelines are still not in place.
This calls for businesses to contemplate the implementation of a group transfer pricing policy, greater documentation of transactions and disclosure, and ethical behaviour.
This shall definitely be extended to capture even transactions between local associated companies.
Kenya has had these regulations since 2006, so further encouragement to have regional regulation policy is needed.
The National ID project and the URA e-tax system, will facilitate government effort to track and monitor business activities with the aim of increasing its tax base.
As the cheapest and the best tax planning tool, UNCCI calls for compliance among the business community to avoid punitive fines, and penalties.
Because of the on-going EAC regional integration process, businesses ought to have an understanding of the different budgets, and taxation changes among the other member states, to maximise business opportunity outside Ugandan borders.
For example Rwanda’s budget this year was geared towards regional integration by making policies and changes to align themselves with the other member states.
On the low side, a proposal was made by the finance minister to withdraw the VAT Investment Trader Facility, which previously allowed investors to claim Input VAT on machinery and equipment etc, immediately as long as there was a promise to produce taxable supplies in the foreseeable future.
This is going to continue straining the cash flow of businesses.
President, Uganda National Chamber of Commerce
and Industry
THE much anticipated 2011/12 budget came with unique opportunities for the business and industrial sector in Uganda.
One; it coincided with the first year of the NDP (National Development Plan), and also the first year of the implementation of a new Government’s manifesto whose theme of “Promoting economic growth, job creation and improved service delivery†is in line with that of the budget that was read by the Minister of Finance.
From the stand point of the Chamber of Commerce and Industry, this, in general is an opportune moment for the business community to appreciate government commitment to invest in key sectors that promote business and trade, and therefore position themselves to think long term and grow their businesses.
The proposal by the Minister of finance to increase public investment in key infrastructure such as roads, railway transport, and the critical energy sector, will facilitate a sustainable and conducive business environment.
UNCI welcomes the Government’s continued support to the industry and manufacturing sector, with energy subsidies on power tariffs due to the expensive thermal power currently generated to fill in energy deficits.
Equipment on solar energy will also be VAT exempt. When the energy goal of production of 250 Megawatts is realised, the cost of production will definitely reduce tremendously.
We all know the effect of recent riots and terror attacks on the business sector operating in the city centre. The onus is on the Government that private sector business interests are secured and protected during such public protests.
Therefore the Government’s effort to ensure businesses operate in a secure environment, by the removal of import duty on security equipment for example, CCTV cameras, metal detectors etc should be applauded. It gives investor confidence to both local and international business interests.
The same security measures were embraced by all the other East African Community (EAC) member states in their budget for 2011/12.
The simplification of business registration services through a review of application for licenses, permits and other procedures, in an effort to remove processes that do not add value, remove duplication and introduce quick online registration, is certainly welcome.
This will enable a quick registration process for any potential investor, but also facilitate a bigger tax base by making it easy for business registration, and discouragement of illegal tax evasions by unregistered and unlicensed businesses.
On regional trade, the Ugandan business community needs to be made aware of the promise from the Minister of Finance to address the issue of double taxation that occurs where business operators have multiple business branches in the region.
The minister emphasised the need to have EAC agreements in place, to encourage regional trade.
It is possible that previously in the absence of these treaties, businesses have been taxed more than once on the same income or transaction. But with the new development, businesses shall definitely benefit because the arrangement will remove the possibility of being taxed twice.
To promote fair competition for local businesses, the 2011/12 budget framework also proposes transfer pricing regulations to shield local businesses from unfair competition from multinational business interests.
This is due to the fact that international businesses carryout business with subsidiaries and associated companies in different countries, and also due to the fact that the different governments compete to get a fair share of tax from these complex transactions.
The minister has indicated in her budget speech that the guidelines for transfer pricing regulations are being finalised.
The Commissioner general Uganda Revenue Authority (URA) already has the powers to tax transactions carried out by related parties at arms’ length but detailed guidelines are still not in place.
This calls for businesses to contemplate the implementation of a group transfer pricing policy, greater documentation of transactions and disclosure, and ethical behaviour.
This shall definitely be extended to capture even transactions between local associated companies.
Kenya has had these regulations since 2006, so further encouragement to have regional regulation policy is needed.
The National ID project and the URA e-tax system, will facilitate government effort to track and monitor business activities with the aim of increasing its tax base.
As the cheapest and the best tax planning tool, UNCCI calls for compliance among the business community to avoid punitive fines, and penalties.
Because of the on-going EAC regional integration process, businesses ought to have an understanding of the different budgets, and taxation changes among the other member states, to maximise business opportunity outside Ugandan borders.
For example Rwanda’s budget this year was geared towards regional integration by making policies and changes to align themselves with the other member states.
On the low side, a proposal was made by the finance minister to withdraw the VAT Investment Trader Facility, which previously allowed investors to claim Input VAT on machinery and equipment etc, immediately as long as there was a promise to produce taxable supplies in the foreseeable future.
This is going to continue straining the cash flow of businesses.
President, Uganda National Chamber of Commerce
and Industry