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Budget 2024-25: vote allocations and proposed tax reforms

To jump-start the financial year beginning in July, the Minister of Finance, Planning, and Economic Development, Matia Kasaija, will continue the yearly tradition on June 13, 2024, by presenting the budget in front of members of parliament and the cabinet.

This budget speech, a practice upheld by his predecessors, will be broadcast on all major media outlets for the public to follow. Put together by technocrats in the Ministry of Finance, Planning, and Economic Development and approved by Parliament, the budget purposes to allocate resources from the consolidated fund (the government’s account) to various public entities known as votes, ensuring the smooth operation of government functions.

A vote is an entity that receives payments from the consolidated fund under specific conditions, such as a ministry. In his lengthy speech, the Minister of Finance will provide a detailed breakdown of how the approved budget will be allocated among various entities, outline the government’s obligations and expenses, and present the overall resource envelope for the financial year.

This is what to expect in the FY 2024/25 budget speech:

The national budget for FY 2024/25 is Shs 72.130 trillion [$18.9 billion] up from Shs 52.74 trillion [$13,998 billion] in FY 2023/24, and Shs 48.13 trillion [$12,774 billion] in FY 2022/23. The budget is going to be financed by domestic revenue which comprises tax, non tax, oil revenue and local government revenue to the tune of Shs 32,384 billion [$8.4 billion].

Budget Support [Grants and loans] Shs 1,393.66 billion [$365.7 million].
Domestic borrowing Shs 8,967.96 billion [$2.3 billion].
Project Support [Grants, loans] Shs 9,583.46 billion [$2.5 billion].
Domestic debt refinancing Shs 19,800.23 billion [$5.1 billion].

The government debt obligations in the next financial year are:

Interest payments Shs 9.064 billion [$2.3 billion].
External debt repayments Shs 3.149 billion [$826.4 million].

Domestic debt payment including to Bank of Uganda Shs 9.1 trillion [$2.3 billion].
Domestic refinancing Shs 12,021 billion [$3.1 billion].

On how the national budget is going to be compartmentalized among different votes this financial year; the critical allotments are:

Ministry of Defence – Shs 3.880 trillion [$ 1,029 billion].

Ministry of works and transport – Shs 2.875 trillion [$763.2 million].
Ministry of Finance, Planning, and Economic Development – Shs. 2.349 trillion [$623.5 million].
Ministry of Energy and Mineral Development – Shs 2.092 trillion [$555.4 million].
Ministry of Health – Shs 1.056 trillion [$280.4 million].

Uganda National Roads Authority – Shs 1.839 trillion [$488.1 million].
State house – Shs 421.922 billion [$111.9 million].
Office of the president – Shs 281.233 billion [$74.6 million].
Office of the prime minister – Shs 114.184 billion [$30.3 million].

Parliamentary commission [Parliament] – Shs 944.745 billion [$250.7 million].
Ministry of Education and Sports – Shs 975.534 billion [$258.9 million].
Ministry of Agriculture, Animal Industry and Fisheries – Shs 801.662 billion [$212.7 million].
Uganda Police Force – Shs 827.423 billion [$219.6 million].
Uganda Prisons Service – Shs 322.864 billion [$85.6 million].

Uganda Revenue Authority – Shs 619. 790 billion [$164.5 million].
Kampala City Council Authority – Shs 796.409 billion [$211.3 million].
Ministry of Kampala Capital City and Metropolitan Affairs – Shs 40.175 billion [$10.6 million].
Uganda Road Fund – Shs 401.952 billion [$106.6 million].

Mulago National Referral Hospital – Shs 125.436 billion [$33.2 million].
Kiruddu National Referral Hospital – Shs 27.435 billion [$7.2 million].
Makerere University – Shs 353.986 billion [$ 93.9 million].
Internal Security Organisation [ISO] – Shs 195.783 billion [$51.9 million].

External Security Organisation [ESO] – Shs 103.589 billion [$27.4 million].
Electoral Commission – Shs 148.890 billion [$39.5 million].
Ministry of Tourism, wildlife and Antiquities – Shs 218.119 billion [$57.8 million].
Uganda Tourism Board – Shs 27.330 billion [$7.2 million].

Ministry of Foreign Affairs – Shs 30.559 billion [$8.1 million].
Cotton Development Organisation – Shs 5.373 billion [$1.4 million].
Ministry of Public service – Shs 36.531 billion [$9.4 million].

In government’s pursuit for additional income to fund its serviceability; it has proposed amendments to the income, value added, excise, and stamp duties to deepen the public purse. These amendments are:

A 5 per cent tax to be imposed on gains from the disposal of non-business assets like shares of a private company, and land within cities and municipalities.

Profits/losses from the transfer of assets between spouses which presently don’t qualify for income tax purposes are likely to be lifted.
Profits earned by an enterprise are to be subjected to taxation and other profits of the enterprise’s branch outside of it but closely related to its activities in Uganda may also be taxed.

An introduction of a 2 per cent withholding tax on interest payments for debentures [bonds] issued to non-resident taxpayers, foreign banks, and financial institutions. Certain interest will be subject to a 15 per cent withholding tax rate.

A 15 per cent withholding tax on annuities paid by a resident person to a non-resident person.
A 10 per cent withholding tax charged on commission paid to payment service providers.

When an employer makes a supply of goods, services to an employee at no cost, such a supply is to be treated as a supply to be considered for value added tax [VAT] purposes.

The threshold for VAT refund claims has been increased from Shs 5 million [$1,327] to Shs 10 million [$2,654]; implying that you can only claim for a VAT refund when you reach the Shs 10 million mark.
VAT withholding agents will be personally liable to pay the amount of VAT they haven’t withheld.

VAT is to be charged on seeds, fertilizers, pesticides and hoes. These were previously exempt from VAT.
An increase in tax on gasoline and gas oil by Shs 100 per litre, and Shs 300 per litre for kerosene.
Excise tax of Shs 2,500 per kilogram to be levied on powder for reconstitution into beer. Initially, this was tax-free.

A 0.5 per cent tax of the value of cash withdrawn through a payment system rather than a financial institution, or, micro-finance deposit taking institution.
Shs 550 per litre tax on fermented beverages like cider, perry, mead or near beer produced from locally grown, or produced raw materials.

International calls from Burundi, and Tanzania will be subjected to preferential excise duty rates. Adhesives like grout, white cement, or, lime are to be subject to a duty rate of Shs 500 per kilogram.

In spite of the adjustments made to the national budget for FY 2024/25 such as the Shs 19.394 trillion [$5.1 billion] corrigenda, and detailed tax proposals; history has shown time and again that government has never worked within its limits. Therefore, supplementary budgets should be expected to be tabled before parliament for additional funding during the course of the approaching financial year.

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