Ms Doris started by giving a background of URA. In 1991, URA was set up as an agency of the Central Government for the administration and collection of specified taxes and revenues in accordance with various taxation statutes.
URA took over the revenue collection functions of the former tax departments under the Ministry of Finance. The vision was to collect revenue competitively, contractually and in a business-like manner.
In her presentation she highlighted the relationship between taxation and investment promotion which is to streamlined tax policy and administration system to facilitate investment promotion through a number of ways that range from; simplified processes relating to registration and payment of taxes, flexibility in tax laws and regulations and general availability of tax information to improve the investment climate. All these act as catalysts for boosting domestic and foreign direct investment.
Uganda is a politically stable country blessed with favourable climatic conditions, a relatively large labour force and open markets presenting a population of 145 million EAC consumers, 400 million consumers in COMESA and SADC (215million) as well as preferential access to the EU and US markets. Further significant oil reserves estimated at 3.5Billion Barrels, including 1.8Bilion that are recoverable presents great opportunity for Foreign Direct Investment. If Uganda is to reap from the existence of such abundant resources, government needs to generate sufficient revenue to facilitate investments in infrastructure in form of roads, energy and processing plants, developing the human capital based (skilled labour) and ensuring political stability. Therefore, the linkage between taxation and investment cannot be ignored.
On the current Investment Opportunities. The Government prioritized building and improving infrastructure, including energy production, lowered tariffs and trade barriers for international trade, and generally welcomes FDI.
On top of Tax incentives, Uganda offers incentives in four priority sectors: information and communication technology, tourism, value added agriculture, and value added investments in mineral extraction. Uganda is also hoping to lure additional investors with several industrial parks under development in Uganda’s largest urban centres including Jinja, Kasese, Mbarara, Mbale, Gulu and Soroti. Investors in priority sectors can get a 49year lease in an industrial park on the outskirts of Kampala without paying the usual $80,000 lease fee. The Namanve industrial park on the outskirts of Kampala has several large international companies already operating divided into four main industrial clusters: Food processing, light industry and services, heavy industry, and another for SMEs.
On tax reforms in Uganda she presented that the Government of Uganda has particularly made effort to rebuild the economy from three major fronts; fostering development of a private sector led self-sustaining economy; rehabilitating and developing the necessary economic infrastructure to facilitate investment and production and mobilizing internal resources to minimize economic overdependence (Deficit finance). These fronts are enabling Government to build a strong economy that will not only increase the levels of income but also strengthen the country’s resource base. With a strong economy it is certain that Uganda is moving towards developing an adequate and sustainable tax revenue base.
On revenue performance , the extensive impact of the URA transformation journey during the last decade have manifested through revenue collections growth and by end of Financial Year 2013/14, domestic revenues were in position to support 71.5% of the national budget that previously funded only 58.7% in FY 2004/05. This signified a growth rate of 317.5% (Ugx1.92trillion to Ugx8.03trillion) for the period 2004/5 – 2013/14. Uganda’s revenue collection growth competes at an average rate of 17.25% for the past ten (10) years against the region’s 16.46% for the period between FY 2005/06 to FY 2013/14.
On the Informal Sector & Uganda’s Tax Base. She emphasized the need for Uganda to formalize businesses. The Informal sector is estimated at 52.4% of the GDP (UBOS, 2014). In 2002 the size was 43%.
Top ranking economic sectors which are highly informal are agriculture (27%), Wholesale & Retail (24%), food processing (15%) and Manufacturing (14%). The informal sector employs more than 70% to 80% of the labour force (UBOS, 2014) while 59.8% of Ugandans are employed in the non-agriculture informal sector (ILO, 2012).
Applause: Uganda is currently funding a recurrent expenditure budget at 100% out of locally collected revenues.
Some of the achievements by the government utilizing domestically mobilized revenues has had the share of population with access to electricity, has risen from 10% in 2009 to 14% in 2013 following the completion of the 250 MW Bujagali Hydropower Project and other mini power projects.
Government is determined to provide electricity for manufacturing at 4 US cents per unit whatever the challenges. Preliminary work on the construction of the Oil Refinery near Hoima is ongoing financed by government revenues at UgShs 14.7 billion. Heavy investment in the improvement of road network using government revenue has recorded the following achievements; The proportion of national paved roads in fair to good condition increased from 74 percent in financial year 2010/11 to 80 percent in financial year 2013/14, and this is projected to improve to 85 percent in this year; and The condition of national unpaved roads in fair to good condition has increased from 64 percent to 67 percent over the same period, exceeding the NDPI target of 55 percent.
On regional integration, Uganda will benefit Ease of doing business through improved customs clearance procedures, enhancing service provision at border points by introducing a 24 hour working system; offer fast clearing services especially for large trucks and reduce time taken for the verification of documents; freedom of movement of goods by removing any border restrictions, accepting the use of one common EAC identification document and ensuring the same standards for document verification at all borders this will reduce time wastage. And harmonization of Tax Procedures of all member countries to make it easy for investors to invest in any country. Uganda is part of the East African single customs territory, thus, URA has offices in Kenya to administer and implement a single customs territory where goods are recognised and revenue is declared and collected at that point.
She appealed delegates to take advantage of incentives and exemptions that are provided in the tax laws in making investment decisions. This requires knowledge on available incentives and how you can invest in areas that can give a head start as far as tax incentives are concerned.