URA Urged to Address 15% Withholding Tax on Members' Dividends
Savings and credit cooperative organizations (Saccos) in Uganda have called upon the Uganda Revenue Authority (URA) to clarify the 15% withholding tax imposed on members' dividends and interest earned on their savings.
The demand comes after President Museveni's directive to exempt Wazalendo Sacco from remitting this tax, sparking concerns among cooperatives nationwide.
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The plea for clarity stems from a 2017 government exemption that relieved all Saccos from remitting 30% of their surplus for 10 years, contributing to the rapid growth of these financial institutions.
However, despite this exemption, Saccos continued to be subject to a 15% withholding tax on members' dividends and interest earned on savings.
Last year, Wazalendo, the country's largest Sacco, petitioned President Museveni, seeking an exemption from remitting this tax, which was granted.
However, other Saccos are now seeking similar treatment, arguing that the directive should apply universally across all cooperatives.
Nankunda Gorden, General Manager of Mushanga Sacco, expressed frustration at the lack of clarity surrounding the directive.
"In December last year, the solicitor general wrote to the permanent secretary and secretary to the treasury regarding this directive but the treasury and URA are yet to pronounce themselves on the matter, leaving Saccos in suspense," she stated.
Robert Bariyo Barigye, Registrar of Cooperative Societies, highlighted the discrepancy between the presidential directive and the current practices of many Saccos.
He remarked, "Whereas there is a presidential directive barring Saccos from withholding their members' money, the majority of these are withholding this money and remitting it to URA."
With over 20,000 registered savings and credit cooperative organizations in Uganda, the impact of the 15% withholding tax on members' dividends and interest earned on savings is significant.
Each member's UGX 100 dividends and interest are subject to this tax, prompting calls for urgent clarification from URA to alleviate uncertainty among Sacco members and operators alike.
