Nabbanja acknowledged the vital role that local investors play in Uganda’s economic development, highlighting their contributions to job creation, industrialization, and reducing reliance on imports.
The government’s promise to streamline tax incentives comes as a response to concerns about the current tax framework’s complexity and perceived imbalance. The Prime Minister acknowledged the need to continuously review and refine the tax incentive framework to maximize its impact while safeguarding the country’s revenue base.
“We must be mindful of the need to protect our revenue base, as over-reliance on tax incentives can lead to revenue losses that could affect our ability to finance critical public services,” Nabbanja added.
Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi, echoed the Prime Minister’s sentiments, emphasizing the importance of a balanced approach to tax incentives.
Ggoobi highlighted that the government’s efforts to enhance domestic revenue mobilization have been successful, with the revenue-to-GDP ratio improving from 8.9% in 2000/01 to 14.3% in the current financial year.
“Our tax policies are designed not just for revenue collection but to ensure fairness, equity, and simplicity,” Ggoobi said.
He noted that tax incentives have significantly contributed to the growth of the industry and agriculture sectors, which have played a crucial role in Uganda’s economic recovery.
Evelyn Anite, Minister of State for Investment and Privatization, stressed the importance of collaboration between the government and the private sector to develop tax policies that address real challenges faced by investors. She dispelled the misconception that tax holidays only benefit foreign investors, emphasizing that local investors also qualify for these incentives.
“We are committed to creating a level playing field where both local and foreign investors can thrive,” Anite said.
Concerns
One key area of concern raised by local investors is the issue of fines and penalties imposed by various government agencies, which some perceive as overly punitive.
Deo Kayemba, Chairman of the Uganda Manufacturers Association, called for more focus on education and sensitization rather than penalties.
“There should be a greater emphasis on supporting businesses to comply with tax regulations rather than prioritizing revenue from fines,” Kayemba argued.
In response, State Minister for Finance Henry Musasizi assured investors that the government is reviewing existing tax incentives to ensure they are strategically focused and aligned with national development goals.
“We are looking at ways to make the tax system more conducive to business growth while ensuring fairness and inclusivity,”
Musasizi stated. He emphasized the government’s commitment to addressing both formal and informal sectors to ensure comprehensive tax compliance.
The conference concluded with a commitment from the government to work closely with local investors in refining tax policies. The goal is to develop a streamlined tax system that supports sustainable economic growth, encourages investment, and ensures that Uganda remains an attractive destination for business
