Under the new tax mobilisation initiatives, a person seeking a licence or any form of authorisation from a statutory authority, local government or regulatory body is required to produce a Tax Identification Number (Tin) . Through this measure, many small enterprises are bound to be absorbed into the revenue base.
The introduction of a broader but higher threshold for presumptive tax — an income tax assessment tool applied to taxpayers who lack comprehensive financial records — is anticipated to generate substantial revenues from large informal businesses and small enterprises such as retail shops, workshops, restaurants and motor vehicle garages.
This threshold was raised from Ush50 million ($15,411) to Ush150 million ($46,233) effective July 1, an adjustment inspired by the growth registered by informal enterprises.
Businesses that register gross annual turnover between Ush50 million ($15,411) and Ush75 million ($23,611) per year are charged presumptive tax of Ush937, 500($289) or 1.5 per cent of the gross turnover, whichever is lower.
Small businesses with annual gross turnover of less than Ush50 million ($15,411) per year are obliged to pay presumptive taxes classified in five tiers: grade one, two, three and “others.”
The tax body is yet to clarify on the distinction between the various assessment grades tagged to businesses that register gross turnover of less than Ush50 million per year.
The enforcement of an advance tax levied on commercial and passenger vehicles with loading capacity of more than two tonnes seeking renewal of operating licences is also likely to raise significant tax revenues from the transport sector.
Under the advance tax schedule, vans, pickups and lorries are subject to a tax rate of 25 currency points per tonne. Based on this rate, an eight tonne truck would pay taxes worth Ush4 million ($1,233) per year while a 10-tonne truck would pay Ush5 million ($1,541) in taxes per annum.
“We have mapped out regions and sectors of attention. So far, about 100,000 small businesses have been identified in Kampala. We intend to capture them in the presumptive tax category that bears an annual rate of Ush500,000 ($154). This translates into roughly Ush50 billion($15 million) per year and we see an opportunity to collect more taxes from this segment,” said Henry Saka, Commissioner for Domestic Taxes.
The East African
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