Companies investing in agriculture, health and social development projects are to benefit from considerable tax exemptions in the coming financial year.
Presenting Uganda's 2008/2009 national budget today, Ezra Suruma the Minister of Finance and Economic Planning said government will prioritize agricultural growth, particularly in agro processing. He said it will also strengthen the focus on service delivery in respect to improved minimum standards for service delivery in health, childcare, education and AIDS prevention.
According to the budget, government is to increase funding for the National Agricultural Advisory Services (NAADS) by 62 percent. NAADS is a government program aimed at enhancing rural livelihoods by increasing agricultural productivity and profitability. Additionally, government will next financial year provide a 50 billion-shilling credit guarantee to banks that are lending for agriculture.
Suruma said that in order to attract investment in agro processing in the rural areas, all new agro processing investments, established after July 1st, will be exempt from paying income tax. The beneficiary businesses must be located at least 30 kilometers outside Kampala and must deal in Ugandan produce.
Suruma explained that the goal is to enhance local agriculture through the processing of Ugandan crops and livestock and increase their export value.
Income tax exemptions have also been proposed for the management and operation of all schools and tertiary institutions. Suruma said this will encourage investment in education and the foregone revenue will be reinvested in improving school facilities and curricula. The estimated revenue loss from the education income tax exemption is three billion shillings.
The exemption of excise duty and tax on the construction of hospitals and hotels that was introduce last year is to be extended for one more year. The Minister of Finance said the estimated revenue loss of 12 billion shillings is justified because the construction industry is a major engine of economic growth in Uganda, contributing to 2.5% of GDP.
Small and medium scale enterprises are not to be left out of the 2008/2009 budgetary and tax priorities.
Government has tripled funding for Savings and Credit Corporative Societies that were launched under the Prosperity for All program last year. The funding has increased from 10 billion shillings to 32 billion shillings. 20 billion shillings has also been added for small-scale capital investments and is available through the Uganda Development Bank.
In order to ensure keep Uganda on track to achieving the Millennium Development Goal of combating HIV/AIDS, malaria and other disease, 98.69 billion shillings has been set aside for the health sector for next financial year. Of this money, 60 billion shillings will be used for the purchase and distribution of anti-retroviral drugs to those in need.