Uganda has announced new tax incentives in a bid to attract local and foreign investors,, in free zones.
The country’s tax body, Uganda Revenue Authority (URA), said that starting next financial year 2018/19, which begins this July, investors in free zones will be exempted from paying Value Added Tax, excise duty and income tax.
Cyprian Chillanyang, assistant commission for business policy at URA, told reporters on Tuesday that the move is meant to increase production for export and create more jobs.
Previously, investors in the parks were only exempted from import duty, to allow them import machinery meant for setting up factories at a reasonable cost.
He said under the new tax measures, the incentives will apply to developers of free zone parks and industrial parks who have invested at least 200 million U.S. dollars over a 10-year period.
A Free Zone is a designated area where goods are regarded as being outside the customs territory, as far as import duty is concerned.
It usually takes the form of manufacturing or processing facilities, science and technology parks or even a tourism development zone.
Stephen Magera, assistant commissioner for field services at URA said government’s objective is to attract at least 1 billion dollars’ worth of investments in the free zones, from the private sector by 2020.
He said the free zone parks will help government in promoting export of goods and services, promote investment from local and foreign sources, and also accelerate export led industrialization.
Figures from Uganda’s central bank, Bank of Uganda, show that the country’s expenditure on imports stood at 5.44 billion dollars in 2017, while earnings from exports stood at merely 2.79 billion dollars. Enditem