The Civil Society Budget Advocacy Group (CSBAG) has called for a clear policy to guide tax exemptions and other investor incentives.
Officials from CSBAG made the plea while appearing before the Committee on Trade, Tourism, and Industry to present a position paper on private sector development and manufacturing programmes in response to the National Budget Framework Paper for the financial year 2022/2023.
CSBAG recommended that the Ministry of Finance expedite the process of developing a clear guide to tax exemptions and other investor incentives.
The group cited the 2019/2020 Office of the Auditor-General report which notes that there is no clear policy guideline for the issuance, management, and monitoring of the various tax benefits and incentives issued by the government to different beneficiaries.
“For example, whereas on one hand government offered a 10 year tax holiday to companies in the steel sector to promote the growth of the sector, on the other hand, the same government offered waivers for import duty on steel products to other companies,” said Patrick Rubangakene, a budget policy specialist with CSBAG.
He said the absence of a clear mechanism and framework exposes the scheme to mismanagement and abuse, with no mechanism to assess the impact of the tax benefits, with some of the offers expiring without follow-up.
He said the absence of a clear framework exposes the scheme to mismanagement and abuse with no mechanism to assess the impact of the tax benefits.
Rubangakene called on the government to subsidise the laboratory testing rates to ease small and medium enterprises (SME’s) product certification.
He said currently micro and small enterprises pay Shs 500,000 for a permit to use the Q-Mark for 12 months while others go up to Shs1 million.