In a bid to expand the country’s tax-base, the Uganda Revenue Authority (URA) has over time imposed an 18% Value Added Tax (VAT) on fire-fighting and safety equipment at International Airport (EBB) procured by Civil Aviation Authority (CAA) as well as on each international travel ticket.
CAA has said the taxes on the trucks and air tickets are unfair and hinder the growth of the aviation sectors.
“I don’t know why URA charges VAT on the fire-fighting equipment because, like ambulances that don’t pay taxes, safety equipment don’t make profits,” said Vianney Luggya, the CAA manager for Public Relations.
The source said the taxes are counter-productive to the aviation industry.
In the same vein, URA imposes VAT on CAA’s earnings on airport service including a charge per international ticket issued
As it is, CAA charges $50 on every ticket a passenger buys for international travel. There is a lesser fee for domestic travel.
“This (the charge) is the biggest source of income that CAA uses (to manage EBB). This means URA collects $7 from every international travel ticket, which makes a ticket more expensive by $7,” noted Luggya.
He said most airports don’t have a passenger service charge.
According to Eng. Ayub Sooma, the CAA general manager, taxing the aviation industry means a direct taxation of the economy.
“The industry opposes taxes that single out aviation supplies to raise revenue. In the whole world, it is only in Uganda where you find a ticket is also taxed.”
CAA has raised this concern to its supervisor, the ministry of Works and Transport to ensure URA reviews the two taxes.
“Putting the 18% Vat on tickets is not acceptable. It raises the price of a ticket, which means some travellers may not be able to afford tickets. All over the world, it is only Uganda doing that. The industry believes it (taxing fire equipment) gives a negative impact and compromises safety at Entebbe,” Sooma said.
Fred Bamwesigye, the deputy managing director of CAA said: ‘We want the taxes to be waived. We are already in a dialogue with the ministry of Finance and URA and hope there will be a rethink on the taxes.”
Uganda has continued its impressive growth in passenger traffic and aircraft movement, with new 190, 264 arrivals recorded in 2018.
For the first time ever, the number of international passenger arrivals hit 1.84 million, a 10.2% growth compared to 1.65 million visitors in 2017, says Bamwesigye.
“This growth could partly be attributed to the increased number of Ugandans travelling for external employment to the Middle East and improved tourism promotion of Uganda’s tourist attractions which have attracted a number of visitors in the recent past,” he said.