Erute South MP Jonathan Odur has raised concerns over proposed changes to Value Added Tax (VAT), questioning both the rate and adjustments to the registration threshold in the ongoing tax reform discussions.
Odur recalled that two years ago, traders in downtown Kampala proposed a reduction in VAT from the current 18%, arguing that the rate is relatively high compared to some countries in the East African region.
He noted that neighbouring countries apply lower VAT rates, including 16% and even 8%, and faulted government for failing to present a comprehensive report addressing these concerns during consideration of the Bill.
The legislator also questioned the proposed increase in the VAT registration threshold from Shs 150 million to Shs 250 million, asking whether the adjustment is justified and how it will impact revenue collection and business compliance.
In addition, Odur raised concerns over Clause 3 of the Bill, particularly its distinction between citizens and foreigners in accessing allowable tax credits.
He argued that setting a higher threshold for foreigners than for citizens creates an uneven standard and could undermine fairness within the tax system.
Odur emphasised the need for a balanced approach that promotes competitiveness while ensuring equity and clarity in tax policy.