Hard times for investors as MPs tighten qualifications for tax incentives

Investors seeking to enjoy tax incentives will have to meet tighter requirements, MPs have resolved.

During consideration of the Stamp Duty (Amendment) Bill 2020, MPs have decided to increase the threshold for those seeking to benefit from incentives to employ 70 per cent of Ugandans, who should also collectively earn 70 per cent of the particular company’s wage bill.

“A percentage rate of 70 per cent citizens be used to replace the current number of 100 citizens; Citizens employed by the company should earn 70 per cent of the total salary budget for a particular financial year,” proposed MP Henry Musasizi, the Chairperson of the Committee on Finance.

MPs also lifted stamp duty on mortgages, which MPs argued was crippling and unfair.

Currently, investors who are citizens of Uganda or the East African Community who inject a minimum of US$1 million enjoy incentives, while foreigners reap the coveted benefit if they inject $10 million.

MPs have further incentivized local investors by lowering their threshold for benefitting from the tax incentive to $300,000 and $100,000 for upcountry investments.

MPs say the additional measures are intended to make a transition to total 100 per cent operations being run by local citizens.

MP Syda Bbumba (NRM, Nakaseke North) said additionally, the companies must have a clear policy aimed at training locals to eventually take over the operations entirely.

“These people must have a programme for training locals because eventually these local people must take over,” she said.

Those applying for professional certificates will now part with Shs100,000 a measure the Minister says will increase on the revenue basket.

Corrigenda

Finance Minister, Hon Matia Kasaija also submitted several corrections to the budget, technically referred to as corrigenda to the budget estimates for financial year 2020/2021.

Most of the errors were either over or under-allocation, which the corrigenda has sought to redistribute to other votes.