Uganda: Body Confirms Tax Exemption on Water

Kampala — Improved supply and access to safe water is a way of improving the livelihoods of the majority of the population in a country like Uganda.

Water, because of the multiplier effect it has and sanitation, to make the benefits of improved water access visible.

According to Ms Doris Akol, Acting Commissioner General Uganda Revenue Authority, people consuming water for domestic use will no longer pay Value Added Tax with effect from October 1.

“Water supplied for domestic use is tax exempt except for that supplied for commercial use will be liable to VAT of 2 %,” Akol explained while responding to concerns from the business community on why water should be taxed.

She was addressing the business community during a URA business consultative forum to discuss issues relating to the 2012/13 tax law amendments and their implications on tax payers.

In the amendments, the Minister of Finance Planning and Economic Development proposed to reinstate VAT on water at 18% to generate Shs.21.7bn.

Akol reiterated concerns about the increase in the Pay As You Earn (PAYE) threshold will be considered since it generated great response from the business community. The finance minister who read the budget also proposed to increase the PAYE threshold from Ushs.130,000 to Ushs.235,000 per month and the tax bands to be adjusted accordingly. “By the end of financial year 2012/13, URA’s support to national budget will be 75% up from the 40% five years ago,” she revealed.