Give more incentives â€" accountants

Jun 18, 2007

UGANDA risks losing investors to her neighbours if the budget continues to give little attention to key areas like incentives, infrastructure, energy and capital markets, accountants have warned

By Peter Kaujju

UGANDA risks losing investors to her neighbours if the budget continues to give little attention to key areas like incentives, infrastructure, energy and capital markets, accountants have warned.

Reviewing the 2007/08 budget, the members of the Institute of Certified Public Accountants of Uganda, were concerned that Uganda had failed to learn from her neighbours.

They, however, acknowledged that although some incentives were given to investors, they expected more to attract new and retain investments.

Japheth Katto, a member of the institute, said they had expected incentives for the capital markets sector but were “disappointed that there was no mention of capital markets in the budget.”

Katto is also the head of the Capital Markets Authority. “The minister emphasised the need to grow savings but nothing was mentioned about capital markets yet the area plays a critical role in mobilisation of savings.

“We expected some incentives like reducing withholding tax on dividends,” he said. Uganda’s withholding tax on dividends stands at 10% compared to Kenya’s 5%.

Fulgence Mungereza, the institute’s president, said although there was talk about reducing poverty in the budget, they are concerned that people were still sleeping hungry and without access to medical services.

The accountants were also concerned that the reduction of VAT on house purchases, would not help the poor but the property developers. They also criticised the local service tax, saying the Government was targeting salary earners “because they are considered to be a soft spot while businessmen go free.”

“We are concerned that the Government continues to target salary earners. They look at that bracket as a soft spot.

“PAYE (Pay As Your Earn) has not changed for a long time yet the cost of living is increasing,” said one accountant who declined to be named.

On the pension sector reform, the accountants said the Government had made promises but failed to deliver.

But Fred Omach, the finance state minister, said the papers regarding pension reforms were ready “and they would be tabled in Parliament for approval before the end of the year.”

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