IMF calls for removal of tax exemption for MPs and military personnel

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The International Monetary Fund has suggested that Uganda taxes its officials to boost domestic revenue. The international lender asked the Ugandan government to repeal the tax exemptions afforded to parliamentary members and the military. In their words, these tax exemptions “undermine taxpayer morale.”

  • The IMF urges Uganda to eliminate tax exemptions for officials and the military.
  • Taxing officials and military incomes is seen as vital by the IMF for boosting revenue.
  • Ugandan authorities have yet to respond to the IMF proposal on tax exemptions.

As seen in the Ugandan newspaper, the Monitor, the International Monetary Fund (IMF) in Uganda’s fifth review under the Extended Credit Facility Arrangement noted that the tax exemptions on parliamentary members and military incomes do little to encourage taxpayers, and it seems to undermine the idea of tax revenue.

The IMF also suggested that the Ugandan government consider taxing non-business capital gains.

“Capital gains, which arise from disposal of non-depreciable business assets and sale of shares, are taxed together with business income at 30 percent,” the Monitor’s report reads.

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The IMF however noted that the gains from this initiative might be minimal especially if taxpayers are given higher salaries.

Ugandan authorities are yet to respond to the proposal in the review which states that the tax exemptions should be included in the 2024/25 financial year budget discussions.

The IMF disclosed that tax expenditures and exemptions had cost Uganda an estimated Shs580 billion of gross domestic tax worth of revenue in 2023.

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