To increase revenue collection and safeguard the government from the constraint of increasing public debt, the Ministry of Finance, Planning and Economic Development has announced new tax policy interventions.
Presenting the National Budget for the Financial year 2021/22, the designated minister of state for Planning, Mr Amos Lugoloobi at the Kololo ceremonial grounds said domestic revenue for next financial year is projected at Shs22.425 trillion, equivalent to 13.8 percent of GDP, compared to a projected outturn of Shs19.432 trillion, equivalent to 13.1 per cent of GDP in FY 2020/21.
Mr Lugoloobi said this target revenue is an increase of 0.7 percentage point of GDP. The increase in tax collections will be realized from an improvement in the level of economic activity, increased efficiency in tax collection by URA through strengthening compliance and enforcement, as well as new tax measures and administration reforms.
To achieve the stated revenue in the national budget for 2021/22, Mr Lugoloobi said the policy interventions to be implement during the course of the year includes reform taxation of rental income to remove the incentive for non-individual rental taxpayers to claim unrestricted deductions which significantly reduce their tax contribution. Reduce rates of depreciation for some classes of assets, discontinue the concurrent deduction of initial allowances and depreciation in the first year of use of qualifying assets.
The other policy intervention interventions he spelt out are: review the capital gains tax regime by allowing for the effect of inflation and providing tax relief for venture capital investments, broaden the scope of taxation of plastics to cover all plastics.
The other policy, according to the minister is rationalize the excise duty regime on telecommunication services by scrapping the excise duty on Over the Top (OTT) and introduce a harmonized excise duty rate of 12.0 per cent on airtime, value-added services and internet data excluding data for provision of medical services and the provision of education services.
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