Personal Taxes

Authorities not requested to revise personal revenue tax pointers

Civil society organizations have urged the government to revise income tax rates and policies, such as Pay-As-You-Earn (PAYE), to ensure that everyone contributes to national revenues.

They recommend increasing income tax (PIT) from $ 67 to $ 200.

Jane Nalunga, Executive Director of SEATINI, presented the results of the analysis of civil society organizations (CSOs) on the tax measures of the East African Community (EAC) for the financial year 2018/19-2021/22 and said the government needs to harmonize the tax system in order to achieve a relative similar figure as in other member states of the East African Community.

“In Kenya, the taxable individual income starts at 223 US dollars, in Tanzania at 116 US dollars and in Rwanda, the country that taxes the lowest income, at 30 US dollars,” emphasized Nalunga.

The report, entitled “Analysis of Tax Measures in the Member States of the East African Community: Are We Moving Towards a Harmonized Tax System?” Also shows limited efforts to harmonize tax laws at the regional level.

A draft code of conduct against harmful tax competition in the EAC was developed back in 2011, but little is being done in terms of implementation, the report continues.

With the exception of Kenya, all other partner countries have a uniform VAT rate of 18 percent, although Kenya levies 16 percent and a reduced rate of 8 percent on oil.

The analysis shows that a lack of political support and intra-community misunderstandings have severely affected the implementation of tax harmonization.

Moses Kaggwa, the economic affairs director for the Department of Finance and Economic Development, noted that the department is in the process of raising the taxable income rate to at least $ 100.

He noted, however, that some employers pay salaries in this category because there is no minimum wage “which can lead to a reduction in the country’s tax base”.

“We have to ensure that at least everyone makes a modest contribution to the provision of services in this country by paying taxes. The lowest tax amount on taxable income is Shs 500 per month which is not that much because even if the same is added to your salary, no one can celebrate it, ”Kaggwa said.

Kaggwa stressed that while tax reviews are needed, issues such as the PAYE threshold should be approached with caution.

Kagumire Abel, Customs Commissioner for the Uganda Revenue Authority (URA), who represented the Commissioner General, stated that they will implement the regional trade guidelines as one of the means of boosting emerging industries so that the region is in the middle income range 2050.

He expressed the concern to promote and improve the agricultural sector “because it is the backbone of regional trade”.

“Agriculture remains a foundation for almost all EAC partner countries, as 60% of interregional trade and all employment opportunities are in agriculture.”

Leonard Ojala Kizito, Economic Affairs Commissioner at the Ministry of East African Affairs, praised SEATINI and other partners for their complementary roles in regional affairs through debates and other engagements that have enriched stakeholders with more knowledge.

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