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Tax Holidays - UN Advises Government To Circumvent Vice

UN Advises Government To Circumvent Tax Holidays

The government of Uganda has been advised by the United Nations to avoid tax holidays as well as exemptions.

The international organization said this should be done if the government is to attain its domestic revenue mobilization.

Yesterday, the government launched its investment financing strategy in Kampala. Ms Susan Ngongi Namondo, the United Nations resident coordinator attended this ceremony.

She said that the government has done an outstanding job in strengthening tax policy and administration. This can be seen through the domestic revenue mobilization strategy.

On the contrary, however, she said it is difficult to achieve the planned revenue if tax holidays and exemptions are not dealt with.

“There have been reservations with regards to tax incentives. Whereas this approach has been used in many developing countries as a bait to attract foreign direct investment, there have been concerns around transparency and effectiveness of tax holidays and exemptions,”

She further noted how tax holidays and exemptions should be seen as a complimentary to enable businesses climate. But at the moment, these two are seen as an alternative.

She eventually addressed the need to focus more on addressing basic energy and transport infrastructure issue. She added the reduction of bureaucracy and cost of administrative requirements.

On that same topic, she talked about strengthening the rule of law in business and contractual processes than focusing on tax incentives.

“If tax incentives are maintained, they should be kept at the lowest levels and restructured to ensure transparency and fairness in their implementation,” she said.

According to some studies, over Shs5 trillion in taxable revenue is foregone because of exemptions and related incentives.

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