Prime
Minister Anite tells traders to upgrade to manufacturing
Ms Anite says traders should join manufacturing to benefit from several government plans, including incentives. Photo / File
What you need to know:
- Ms Anite says that traders should transition to manufacturing so that they can benefit from tax incentives
Investment and Privatisation Minister Evelyn Anite has told traders to upgrade to manufacturing to take advantage of incentives that many Ugandans believe are meant for foreigners.
Provision of incentives to investors remains a sticky issue in Uganda through which government foregoes an annual average of at least Shs2.4 trillion.
Thus, Ms Anite said Ugandans involved in merchandise trade should transition to manufacturing goods they import to improve the country’s industrialisation capacity and save government from spending foreign exchange on goods that can be manufactured here.
This, she also noted, would enable such traders to benefit from incentives that for years have largely been enjoyed by foreigners and a few Ugandans.
“Local investors in this country should [get] away from trading and [transition] to manufacturing. Get in agro-industries among others. They should become investors who qualify for incentive government keeps providing,” she said, noting that government has earmarked land in industrial parks and free zones, which some of those in trading could take advantage of and establish industries.
Last month, government, through Uganda Investment Authority started a plan in which it seeks to help traders from Kikuubo in Kampala to transition into manufacturers as part of a larger plan to promote import substitution.
While unveiling the plan then, UIA Director General Robert Mukiza, said they had already created a special desk under the Domestic Investment Division to guide on work plans, targets, and timelines to ensure a faster transition of business people from trading to manufacturing.
“Domestic investors are crucial to Uganda’s industrialisation that is why we have a special mission to see more traders transition into manufacturing products that they import,” he said then.
Uganda Revenue Authority commissioner for domestic taxes Chelangat Sarah Muzungyo, said tax incentives are regulated by the amount an investor is willing to invest, with foreign investors required to have an investment of $10m while local investors are required to have at least $300,000 investment capital.
Balancing between tax incentives and revenue generation
Meanwhile, Prime Minister Robinah Nabbbanja said government continues to review and update tax incentives to ensure that they align with economic goals, while safeguarding revenue collection.
Speaking at a conference about tax incentives, policies and administration, Ms Nabbanja told investors that government shall extend incentives to strategically focused sectors of the economy to maximise outcomes that effectively contribute to economic gains such as job creation.
“However, we are aware of the need to strike a balance. While tax incentives are essential, we must ensure they are effectively targeted, transparent, and provide value for money. To this end, government is committed to continuously review and refine the tax incentive framework to maximise its effectiveness and minimise revenue losses,” she said.
Tax incentives, which include income tax exemptions to companies exporting at least 80 percent of their production, among others, play a pivotal role, especially in attracting investments into key sectors such as manufacturing, agriculture and technology.
Ms Nabbanja noted that other incentives come in the form of tax holidays, which especially apply to investors in industrial and commercial buildings, in addition to exemptions on investments in the construction of hotels, hospitals, and other facilities.
Other exemptions also apply to raw materials used in export-oriented production, value-added exemptions on agricultural equipment, health services, and education materials, and value-added refunds for investors involved in export production.
Government has also created incentives for local investors operating within designated special economic zones, among which include exemptions from corporate tax, zero-rated value-added tax, and customs duty exemptions on imported inputs and raw materials.
Government loses at least an average of Shs2.4 trillion annually due to tax exemptions and incentives.
Secretary to the Treasury Ramathan Ggoobi said that the government has strengthened its tax system over the years, increasing revenue to gross domestic product ratio from 8.9 percent to June 20001 to 14.3 percent this financial year.
The growth, he said, signals continuous efforts to enhance domestic revenue mobilisation, supported by various reforms in the tax policy and administration.
“Our policies are not just about revenue collection, they are about fairness, equity, and simplicity. We have introduced several measures to ensure that all sectors of the economy contribute fairly to national development. These measures include reforms in income tax, value-added tax, and excise duties, designed to enhance revenue collection while minimising the burden on taxpayers. This ensures that everyone, from small businesses to large corporations, pays their fair share,” he said.
“To drive the socio-economic transformation of our economy, we have provided incentives to various sectors and individuals. Additionally, to ensure that local investors benefit from these incentives, government has established favorable access thresholds,” he added.
