URA to collect Shs2.5 trillion annually from oil activities
URA says collections from oil activities will increase when production starts. PHOTO | FILE
What you need to know:
- URA expects to collect Shs2.5 trillion annually in the development stage, which is expected to increase by Shs4.5 trillion annually once production starts.
Uganda Revenue Authority (URA) has said it expects to collect at least Shs2.5 trillion as tax revenue following the signing of the Final Investment Decision (FID).
Speaking during release of half year results, URA Commissioner General John Rujoki Musinguzi, said now that FDI has been signed URA will collect Shs2.5 trillion annually, which is expected to increase by Shs4.5 trillion annually once production starts.
“With FDI signed, we will collect Shs2.5 trillion annually and when oil begins to flows we expect an additional Shs4.5 trillion annually from the oil and gas sector,” he said, noting a number of staff have been trained in preparation for oil activities.
“We are prepared to effectively collect every tax from service providers and contractors in the oil and gas sector, which is about Shs2.5 trillion annually as additional tax related to this sector until when first oil starts to flow,” Mr Musinguzi said.
He also noted that whereas there are deliberate efforts by government to encourage Ugandans to participate in oil and gas activities, companies must ensure that they are tax compliant.
“So, do not lose the opportunity to participate in this lucrative stage because of non-compliance resulting from poor record keeping. We want our people to succeed in this sector,” he added.
Last week government and partner companies signed the Final Investment Decision, opening the oil sector in Uganda to investments worth $10b (about Shs35 trillion).
Patrick Pouyanné, the TotalEnergies chairman and chief executive officer, said the development phase will see investment of at least $10b (about Shs35 trillion) injected into the economy before 2025, when first oil is expected to star flowing.
The Final Investment Decision covers the duration of the development stage to first oil.
Government has also indicated that companies in the oil and gas sector will not be charged withholding tax on services rendered in order to support growth of the sector.
Mr Musinguzi said that although URA is expected to collect a lot of money from oil-related activities, it was still not be enough to take the tax agency to where it wants to be.
“By the time we start producing the first oil - our collection target will be about Shs40 trillion. So, [what will be collected by then] will only be about 10 per cent [of our targets. Although exploitation of oil is a milestone in our journey as a nation, we must grow our tax base across the economic sectors. We cannot just rely on oil revenues,” he said.
