New taxes introduced, VAT, passport fees up

By Joan Pounds

Finance minister, Matia Kasaija, has proposed several new taxes. He has also increased Value Added Tax (VAT) threshold.
Presenting the 2015/16 financial year budget to Parliament presided over by Speaker Rebecca Kadaga; the finance minister revealed that Government has increased the VAT threshold from sh50m to sh150m, citing changes in the economic situation of the country.
“The VAT threshold has been revised to sh150 million to take into account these changes. The VAT threshold has been maintained at sh50 million since the inception of VAT in 1997. This threshold has been overtaken by events such as the growth in the economy, exchange rate depreciation and inflation,” he said.
In what he described as formalizing taxes, the long arm of the tax collection body, the Uganda Revenue Authority will also stretch to the informal sector, which Kasaija said contributes 49% of the country’s GDP - yet it brings in minimal revenue.
“Commencing next financial year, we are going to use the withholding tax system through designated agencies to collect taxes from these (informal) businesses,” he said.
On the transport sector, Kasaija announced a mandatory payment of tax for all public service vehicles and Goods Motor-Vehicles. This tax will be paid at the renewal of the annual licenses.
“This will only be on renewal and not at first registration,” he said.
Kasaija has also announced what he dubbed ‘a temporary action’ to increase environmental levy on used cars.
The environmental levy on used motor-vehicles, Kasaija said will be increased from 20% to 35% for motor vehicles of 5-10 years old, while that of vehicles above 10 years will be at 50%.
“However, this excludes Goods Vehicles," he said.
Government has also increased passport fees.
“Passport fees have been increased by sh30, 000 to sh150, 000 and a special passport fees at sh300,000 has been introduced for any person who wishes to get a passport expressly within 24 hours,” he said.