International Monetary Fund to Conduct Uganda Tax Exemption Study

International Monetary Fund to Conduct Uganda Tax Exemption Study

From New Vision

The International Monetary Fund (IMF) will support a study to ascertain the extent of tax revenue missed through exemptions to investments in the country.

Ana Lucia Coronel, the IMF senior resident representative in Uganda, said the institution hopes to use the study which will be concluded in the next nine months to encourage the Government to gradually reduce exemptions and widen the tax base.

“More needs to be done to collect revenue. How much is the gap that they are not collecting-we have this suspicion that it comes from exemptions,” said Coronel.

Uganda’s tax to GDP ratio is the lowest in the region, at about 12.5%, compared to even smaller economies such as Burundi and Rwanda. Kenya’s tax to GDP ratio is at 24% while Tanzania’s is at 16%. Sub-Saharan average is 18%.

The low tax to GDP ratio illustrates the amount of money received from taxes compared to all the other economic activities in the country. Taxes remain the main source of revenue for government’s planned expenditure.

In the past, URA has blamed the lack of a national identity card for the small ratio citing difficulty in following defaulters.

Read more at newvision.co.ug