URA BUDGET BREAKFAST KATESHUMBWA DICKSON, COMMISSIONER CUSTOMS 13 JUNE 2016, HOTEL AFRICANA

Transcription

1 URA BUDGET BREAKFAST KATESHUMBWA DICKSON, COMMISSIONER CUSTOMS 13 JUNE 2016, HOTEL AFRICANA

2 THE AMENDMENTS VAT Act. Excise Act. East African Community (EAC) Based On The Tax Bills 2

3 VALUE ADDED TAX 3

4 VALUE ADDED TAX (VAT) AMENDMENTS Item Description Illustration HS Code Comments 1 Compact Fluorescent Light (CFL) bulbs with a power connecting cup at the end and lamps and bulbs made from Light Emitting Diodes (LED) technology for domestic and industrial use VAT at a rate of 18% is applicable. 4

5 VALUE ADDED TAX (VAT) AMENDMENTS Item Description and Illustration HS Code Comments 2 ALL BULBS AND LAMPS Various ALL BULBS AND LAMPS PAY VAT AT THE RATE OF 18% 5

6 VALUE ADDED TAX (VAT) AMENDMENTS Item Description Illustration HS Code Comments 4 Supply Of Machinery Used For The Processing Of Agricultural Or Dairy Products (Xxiv) Hullers; (Xxv) Oil Press; (Xxvi) Tillers; (Xxvii) Grain Dryers; (Xxviii) Manure Spreaders; Various VAT At A Rate Of 18% Is Exempted. 6

7 VALUE ADDED TAX (VAT) AMENDMENTS Item Description Illustration HS Code Comments 4 (xxix) fertilizer distributor; (xxx) Transplanters; (xxxi) Juice Presses And Rushers; (xxxii) Seed And Grain Shellers; (xxxiii) Silage Chopper Machines; (xxxiv) Color Sorters For Coffee; (xxxv) Coffee Roasters; Various 7

8 EXCISE DUTY 8

9 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 1 Cigarettes (soft cap) ,000 per 1000 sticks 9

10 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 2 Cigarettes (Hinge Lid) ,000 per 1000 sticks 10

11 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 3 Cigars, cheroots and cigarillos containing tobacco % 11

12 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 4 Smoking tobacco whether or not containing tobacco substitutes in any proportion % 12

13 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 5 Homogenized or reconstituted tobacco % 13

14 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 6 Other cigarettes % 14

15 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 7 Ready to drink spirits % 15

16 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 8 Petrol/Motor spirit (gasoline) Excise duty of Shs.1,100/- per Littre 16

17 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 9 Diesel/gas oil(automotive, light, amber for high speed engine) Excise duty of Shs.780/- per Littre 17

18 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 10 Cane or beet Sugar and chemically pure sucrose in solid form Excise duty of Shs.100/- 18

19 EXCISE DUTY AMENDMENTS Item Description HS Code Comments 11 Motor vehicle lubricants Excise duty of 10% 19

20 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 12 Sugar confectioneries (chewing gum, sweets and chocolates) Excise duty of 20% 20

21 EXCISE DUTY AMENDMENTS Item Description Illustration HS Code Comments 13 Furniture (a) Specialized hospital furniture % (b) b)other furniture 21

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23 TARIFF TREATMENT OF GOODS FROM COMESA Import duty will not be charged on goods produced or manufactured in the territory of COMESA member states which comply with the rules of origin set out in ANNEX IV of the COMESA Treaty as read with Article 48 of the COMESA Treaty, with the exception of ; 23

24 TARIFF TREATMENT OF GOODS FROM COMESA 24

25 TARIFF TREATMENT OF GOODS FROM COMESA 25

26 TARIFF TREATMENT OF GOODS FROM COMESA 26

27 ISSUANCE OF CERTIFICATES OF ORIGIN The Uganda Revenue Authority shall be responsible for issuing Certificates of Origin required by section 111(2) of the East African Customs Management Act,

28 AMENDMENTS TO THE EAST AFRICAN COMMUNITY COMMON EXTERNAL TARIFF (EAC-CET) 28

29 AMENDMENTS TO THE EAST AFRICAN COMMUNITY COMMON EXTERNAL TARIFF (EAC-CET) 29

30 AMENDMENTS TO THE EAST AFRICAN COMMUNITY COMMON EXTERNAL TARIFF (EAC-CET) 30

31 AMENDMENTS TO THE EAST AFRICAN COMMUNITY COMMON EXTERNAL TARIFF (EAC-CET) 31

32 AMENDMENTS TO THE EAST AFRICAN COMMUNITY COMMON EXTERNAL TARIFF (EAC-CET) 32

33 AMENDMENTS TO THE EAST AFRICAN COMMUNITY COMMON EXTERNAL TARIFF (EAC-CET) 33

34 AMENDMENTS TO THE EAST AFRICAN COMMUNITY COMMON EXTERNAL TARIFF (EAC-CET) propelled 34

35 MERGING OF HS CODES AND CORRECTIONS OF ITEMS IN THE EAC CET Split of HSC as follows; Worn items of clothing Worn items of footwear Other worn articles 35

36 ITEMS CONSIDERED FOR DUTY REMISSION; Grant duty remission on inputs for the manufacture of matches and matchboxes at a rate of 0% to manufacturers in the region. Grant duty remission on inputs for the manufacture of nylon yarns of HSC and at a rate of 0% to manufacturers in the region. Grant duty remission on inputs for the manufacture of deep cycle batteries at a rate of 0% to manufacturers in the region. Grant duty remission on inputs for the manufacture of dry cell batteries at a rate of 0% to manufacturers in the region. Grant duty remission on inputs for the manufacture of agricultural equipment at a rate of 0% to manufacturers in the region. Grant duty remission on raw materials for the manufacture of solar equipment at a rate of 0% to manufacturers in the region. 36

37 AMENDMENTS TO THE 5TH SCHEDULE OF THE EAST AFRICAN COMMUNITY CUSTOMS MANAGEMENT ACT 2004 Item Description 1 Incinerators for use in hospital 2 Paragraph 26 of Part B GENERAL EXEMPTIONS Action To be exempted from taxes under the 5th schedule Spare parts and accessories deleted. It shall read as follows: Specialized Solar and Wind Energy Equipment Specialized equipment for development and generation of Solar and Wind Energy, including deep cycle batteries which use and/ or store solar power 37

38 AMENDMENTS TO THE 5TH SCHEDULE OF THE EAST AFRICAN COMMUNITY CUSTOMS MANAGEMENT ACT 2004 Item Description 3 Paragraph 28 of Part B GENERAL EXEMPTIONS 4 HVAC (Heating, Ventilating and air conditioning equipment classified under HSC and for pharmaceutical manufacturers Action Hospital uniforms deleted. To be exempted from taxes under the 5th schedule 38

39 AMENDMENTS TO THE 5TH SCHEDULE OF THE EAST AFRICAN COMMUNITY CUSTOMS MANAGEMENT ACT 2004 Item Description 5 Refrigeration equipment for dead bodies for use in hospital, city council and funeral homes 6 Blood collection tubes of HSC Action To be exempted from taxes under the 5th schedule To be exempted from taxes under the 5th schedule 39

40 ITEMS UNDER DUTY REMISSION Uganda List of Raw materials was reviewed and eligible items reduced to 27 items as listed below; HS Code Description of Goods CET Rate Duty Remission Other orange juice, frozen or not frozen 25% 10% Other, apple juice 25% 10% Active yeasts 25% 10% Cement clinkers whether or not coloured 10% 0% 40

41 ITEMS UNDER DUTY REMISSION HS Code Description of Goods CET Rate Duty Remission Petroleum jelly 25% 10% Alkyd resins, in primary forms 10% 0% Other plates of polymers of ethylene, 10% 0% Other plates, sheets, film, foil and strips 25% 10% Other plates of acrylic polymers 25% 10% Other plates, sheets, film, foil and strip 10% 0% 41

42 ITEMS UNDER DUTY REMISSION HS Code Description of Goods CET Rate Other plates, sheets, film, foil and strip 10% 0% Other plates of other plastics 25% 10% Unbleached Kraftliner in rolls or sheets 25% 10% Unbleached sack kraft paper in rolls or sheets. 25% 10% Duty Remission Other unbleached kraft paper and paperboard 25% 10% Other folding cartons, boxes and cases, of 25% 10% 42

43 ITEMS UNDER DUTY REMISSION HS Code Description of Goods CET Rate Straw wrappers 10% 0% Duty Remissi on Cotton sewing thread containing 85% or more 25% 10% Unbleached Plain cotton weave, with >=85% 25% 10% Of aramids, High tenacity yarn of nylon or other polyamides Other, High tenacity yarn of nylon or other polyamides 10% 0% 10% 0% Textured yarn of polyesters 10% 0% 43

44 ITEMS UNDER DUTY REMISSION HS Code Description of Goods CET Rate Duty Remission Other multiple or cabled yarn, nes, not put 10% 0% Other, synthetic Monofilament 10 10% 0% Sewing thread of artificial staple fibres 25% 10% Single yarn, with>=85% staple fibres of 10% 0% Multiple or cabled yarn, >=85% acrylic or 10% 0% Plain weave fabrics, containing <85% 25% 10% 44

45 HOW THE CHANGES WILL IMPACT ON BUSINESS; Revenue Collection The revenue measures in this regard are meant to enable government execute its mandate for better roads (transport), health sector, Agriculture etc. The measures will further facilitate investment including emerging industries particularity petroleum, mining and construction. 45

46 HOW THE CHANGES WILL IMPACT ON BUSINESS; Boosting of Local Industries / industrialization more specifically textiles, motor vehicle assembly and the textile industries. This is important for the economies of the partner states and with the combined GDP and Population we are bound to attract On the average, the size of EAC countries is around 20 million people in population with a GDP of around US $20 billion. Such economies on their own are too small to attract any major meaningful investment in today s globalized economy, where mass production is vital to reduce unit costs. By moving towards the creation of one economic region through the Customs Union, EAC created a single market of over 143 million people and a combined GDP of around US$ billion (EAC Facts & Figures Report 2014). This large economic region can only be meaningful if it is more than a simple aggregation of neighboring countries. Before the Customs Union, trade in the region was carried out under different external tariffs; customs regulations, procedures and documentation. So the move to industrialize by government is an important measure. 46

47 HOW THE CHANGES WILL IMPACT ON BUSINESS; Value Addition in Agriculture; The Government in an effort to improve on value addition in agriculture has increased the number of machines exempted from VAT that are used in processing of Agricultural products. This measure will go a long way in minimizing post harvest losses. 47

48 HOW THE CHANGES WILL IMPACT ON BUSINESS; Import Duty exemption on imports of goods for use in the generation of Solar and Wind energy. Furthermore there is VAT relief on producers of Solar, wind and Geo Thermal operations. These two measures are geared to improving the country s effort in expanding the usage of renewable energy while reducing dependence on non renewable sources of energy. 48

49 HOW THE CHANGES WILL IMPACT ON BUSINESS; VAT exemption on imported goods for use by contractors and subcontractors of hydro electric power projects. This still is to boost the supply of renewable electric energy as the country strives to attain use of green energy. 49

50 HOW THE CHANGES WILL IMPACT ON BUSINESS; HVAC (Heating, Ventilating and air conditioning equipment classified under HSC and for pharmaceutical manufacturers. This measure will help Uganda boost its production of safe medicines that will conform to the World Health Organization (WHO) international best practice in the manufacture of medicines. It will also help on exports, 50

51 HOW THE CHANGES WILL IMPACT ON BUSINESS; Grant duty remission on inputs for the manufacture of matches and matchboxes at a rate of 0% to manufacturers in the region. Uganda will establish its self as a manufacturer of Match Boxes and will be able to export earning the country the hard earned foreign exchange. 51

52 HOW THE CHANGES WILL IMPACT ON BUSINESS; Grant duty remission on inputs for the manufacture of deep cycle batteries at a rate of 0% to manufacturers in the region. Uganda has established itself as a manufacturer of deep cycle batteries used to store energy for lighting the homes in case of power failure or solar charge in areas where electricity has not reached. The manufactures in this area will get a great boost and will be able to recycle used batteries and manufacture new batteries from scrap. 52

53 HOW THE CHANGES WILL IMPACT ON BUSINESS; Grant duty remission on inputs for the manufacture of dry cell batteries at a rate of 0% to manufacturers in the region. Uganda in the same vein has established itself as a manufacturer of dry cell used in radios and torches for domestic use in case of power failure or in areas where electricity has not reached. The manufactures in this area will get a great boost and will be able to recycle used dry cell batteries and also manufacture new batteries from scrap. 53

54 HOW THE CHANGES WILL IMPACT ON BUSINESS; Grant duty remission on inputs for the manufacture of agricultural equipment at a rate of 0% to manufacturers in the region. Uganda has set up factories for hoes and other agricultural equipment such as tractors and trailers. 54

55 HOW THE CHANGES WILL IMPACT ON BUSINESS; Grant duty remission on raw materials for the manufacture of solar equipment at a rate of 0% to manufacturers in the region. Uganda has various Companies assembling and manufacturing solar equipment. This measure will help boost this sector and make the country self sufficient and engage in import substitution making the country self reliant. 55

56 HOW THE CHANGES WILL IMPACT ON BUSINESS; Incinerators for use in hospital; Incinerators are important in the safe disposal of Hospital waste. This will stop the spreading of diseases in medical institutions and will improve on the health and sanitation of the hospital environment. 56

57 HOW THE CHANGES WILL IMPACT ON BUSINESS; Refrigeration equipment for dead bodies for use in hospital, city council and funeral homes. Most Hospitals lack the above facilities due to the cost of acquiring them. Exempting the same will improve on the handling of the departed and help safeguard hygiene in the aforementioned facilities. 57

58 HOW THE CHANGES WILL IMPACT ON BUSINESS; Blood collection tubes of HSC The state of Uganda s health has been making remarkable improvement. Blood collection tubes are a new invention in the sector and are charged taxes due to their placement in the East African Community Common External Tariff (EAC - CET) and the tax law. Exempting them from taxes will greatly improve on the diagnostic Laboratories and hospital capabilities of delivering accurate results for the patients in this country. 58

59 HOW THE CHANGES WILL IMPACT ON BUSINESS; BLOOD COLLECTION TUBES: Plastic vacuum tube (dimensions : 495 mm x 190 mm x 270 mm) containing 9.8 mg of anticoagulating agent, intended to be used in haematology for blood collection (it is closed with a seal/stopper) 59

60 HOW THE CHANGES WILL IMPACT ON BUSINESS; TRANSPORT SECTOR The government considered the reduction of taxes on Road Tractors, Goods carrying Vehicles and Buses to improve on the competitiveness in as far as the regional dynamics are concerned The Tractor heads were reduced to 0% Duty to improve on Uganda s capacity to carry out long Haulage of Goods to match our regional partners 60

61 HOW THE CHANGES WILL IMPACT ON BUSINESS; TRANSPORT SECTOR The buses of a capacity exceeding 25 persons were meant to decongest the city and towns in Uganda and the rate of 10% is supposed to reduce the cost of acquiring a bus and encourage private investment in the large scale transportation. The Goods Carrying vehicles of above 5 tones to below 20 tones gross vehicle weight (GVW) had a reduction to 10% and those above 20 Tones GVW had a reduction to 0%. This would mainly help in the transportation of food stuffs from upcountry to the towns and cities to complement government efforts that have been put on the road network. 61

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63 TAX POLICY CHANGES 2016/2017 HENRY SAKA COMMISSIONER DOMESTIC TAXES June 13,

64 Outline 1. Preamble 2. The Policy proposals 2016/17 3. Impact of policy changes on revenue collection 4. Salient features to note: June 13,

65 Theme Enhancing productivity for Job creation June 13,

66 INCOME TAX (AMENDMENT) ACT, June 13, 2016

67 Carry forward losses in relation to mergers and acquisition Section 38 and section 75 harmonized where there have been mergers and acquisition / re-organization; section 75 provides the rules and conditions Conditions under section 75 remain unchanged Underlying ownership should not change by 50% or more If change is 50% or more then other special conditions apply June 13,

68 International Agreements Double Taxation Agreements (DTA) S.88(5) limits benefits by examining the underlying ownership of these businesses; ensures that there is no undue leakage The amendment clarifies conditions under which these businesses may benefit from reduced tax rates Changes; PLCs excluded from the restrictions Any other company with substantial operations in the DTA country can also benefit from favorable treaty rates if they are the beneficial owners Countries include; Denmark, UK, South Africa, Mauritius, India, Zambia, Netherlands, Norway and Italy June 13,

69 Others Income Tax Amendments Petroleum Sector; To align provisions of the Income Tax Act to the Petroleum Act and PSAs Employees of Diplomatic institutions; Required to file returns of income with URA Income tax exemption granted to; International Centre for Research in Agroforestry( ICRAF) International Potato Centre June 13,

70 VAT (AMENDMENT) ACT, June 13, 2016

71 Aid Funded Projects S.25 To level ground for locally manufactured goods to compete with imported substitutes for Aid funded projects No VAT charged on goods & services supplied to contractors of Aid funded projects The Suppliers will claim VAT incurred June 13,

72 Business Process Outsourcing To encourage investment in businesses providing services to foreign companies, and to create employment in Uganda The person providing the service will claim VAT credit on services imported URA to issue a Practice Note to define Business Process Outsourcing June 13,

73 Midstream Petroleum Operations To cater for midstream petroleum operations in the petroleum taxation regime To provide for VAT registration to be able to claim VAT refunds Mid-stream includes refineries and pipeline operators June 13,

74 Re-classification of items S/N Item Previous Amendment 1 Wheat Standard rated Exempt 2 Solar power Exempt Standard rated 3 Goods & Services supplied to contractors & subcontractors of solar power or geothermal power projects, biogas and other renewable energy Standard rated Exempt 4 compact fluorescent bulbs with a power connecting cap at the end and lamps and bulbs made from Light Emitting Diodes (LED) technology for domestic and industrial use Exempt Standard rated June 13,

75 EXCISE DUTY (AMENDMENT) ACT 2016 June 13,

76 Refund of Excise Duty Excise duty paid on manufacture of approved healthcare or medical products to be refunded Minister to issue statutory instrument to specify the healthcare & medical products Manufacturers of approved healthcare or medical products should register for LED effective 01/07/2016 June 13,

77 Tobacco Change in Excise duty rates Soft cap 50,000/- per 1000 stick (from 45k) Hinge Lid 80,000/- per 1000 sticks (from 75k) Other tobacco to 200% Spirits from 70% - 80% Fuel Petrol 1,100/- per litre (from 1,000/-) Diesel 780/- per litre (from 680/-) Motor Vehicle Lubricants 10% (from 5%) June 13,

78 Furniture products Second Schedule cont. Excise duty on specialized hospital furniture has been removed Other furniture; duty remains 10% Cane or beet sugar and chemically pure sucrose in solid form from 50/- to 100/- per kg Sugar confectioneries (chewing gum, sweets and chocolates) at 20% June 13,

79 STAMP DUTY( AMENDMENT) ACT 2016 June 13,

80 Change in Stamp duty rates To reflect the changes in the value of the shilling. Increase of duty from 5,000/- to 10,000/- wherever applicable, e.g. letters of credit, caveats, etc Increase of rate for Exchange of property from 1% to 1.5% Increase of rate for Transfer from 1% to 1.5 % June 13,

81 FINANCE ACT 2016 June 13,

82 FINANCE ACT 2016 A buyer of a motor vehicle is required to notify URA about the change in ownership within 3 months (previously 14 days) Failure to notify the licensing officer within that period is an offence URA to issue Certificates of Origin required under the East African Customs Management Act, 2004 All tax arrears owed by a SACCO as at 31st December, 2015 are waived June 13,

83 Tax Procedures Code Act (2014) (TPC) June 13,

84 Objectives To adopt uniform procedures for the registration, assessment and collection of all domestic taxes To promote efficiency in domestic tax administration by harmonizing, consolidating and regulating tax procedures in a single law To streamline and simplify the administration and collection of taxes June 13,

85 Stakeholders Stakeholders Impact Tax Agents Should be licensed by TARC Responsibilities and obligation have been outlined in the law Taxpayers Taxpayer with an annual turnover of 500m or more required to have audited financial statements ICPAU Representation on TARC Only members can audit taxpayers with annual turnover of 500m or more Uganda Law Society Representation on TARC URA Board Appoint 2 representatives on TARC TARC Licensing of Tax agents. Renewal of Licence Cancellation of Licence

86 Administrative Measures June 13,

87 Register Cleaning Reasons: Wrong registration details Failure to amend registration details Registration of business for fraud purposes Action; Taxpayers are advised to update their registration details June 13,

88 Taxpayer Register Expansion (TREP) To formalize the informal sector Collaboration among URSB, KCCA, URA & MoLG Focus on 34 Municipalities No license will be issued without a TIN June 13,

89 Reasons; Compliance Enhancement Under declarations, especially VAT Traders not issuing receipts Receipts without TINs Unregistered businesses Unregistered business branches Individuals registered as employees but running unregistered business June 13,

90 Actions; Receipt campaign Compliance Enhancement Traders required to issue tax receipts Some features of a receipt include; TIN of seller Name of seller Date of transaction, etc This will form a basis for the implementation of Electronic Fiscal Devices (EFDs) June 13,

91 Actions; Compliance Enhancement Electronic Fiscal Devices (EFDs) To be piloted in Supermarkets under LTO & MTO from 01 st Jan 2017 Device will capture both Expenses & Sales Information to be transmitted to URA directly Comparing information from different sources eg Customs, Government, returns filed. High net worth individuals with assets base not commensurate to tax returns June 13,

92 Compliance Enhancement International Taxation Expand and strengthen the international taxation office through attachment, training and purchase of equipment Focus will be on related party services and treaty shopping June 13,

93 Changes in administrative procedures Expect some adjustments of the E systems and related forms June 13,

94 Thank You June 13,