Acholi Business Community Ask URA for Tax Holidays

The business community in Gulu City have asked the Uganda Revenue Authority - URA to consider granting them tax holidays to spur investments in the post-war economy.

Through their umbrella body Gulu City Business Association, the local business owners say they have greatly contributed towards the growth of Gulu that ultimately earned it a City status, therefore they should be rewarded with some tax incentives.

Alex Otema, the Chairperson of the association that comprises up to 460 different sectors, says the majority of the members operated during the very grim era of the insurgency orchestrated by the Lord’s Resistance Army (LRA) rebels.

As a result of the destructive LRA war, Otema who established his business in Gulu in 1993 explains that several businesses have collapsed while others are struggling to operate to date thus a tax motivation programme would aid their survival and competitiveness. 

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Kelly Komakech, a member of the Urban Authorities Association of Uganda and former Pece Division Chairperson observes that tax exemptions would be a great motivational package for the post-war businesses.

In 2018, the association’s leadership also wrote to the tax body to grant them a year-long tax holiday but they were advised to petition Parliament instead. They also decried the already unfair competition with foreign investors who have narrowed their retail trade space.

John Musinguzi Rujoki, the Commissioner-General of URA argues that Uganda’s annual tax revenue performance in terms of tax GDP ratio that ranges between 13 to 14 per cent which is below the internationally acceptable parameters. 

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Rujoki applauded the business community and stakeholders for the continuous support to the tax authority aimed at strengthening the countries financial independence without heavily relying on foreign financial aid.

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The tax holiday is a government incentive programme that offers a tax reduction or elimination to business. It is commonly used by the government especially in developing countries to attract foreign investment.

Gulu City’s rapid growth is largely attributed to local investors in the sectors of hotel and hospitality industry; property developers, market vendors, boda-boda and taxi transporters, produce dealers, petrol stations, contractors, farmers, retailers and wholesalers among others.

The tax body has been given an annual revenue target of 19.7 trillion against 45 trillion national budget for financial year 2020/2021. Of the amount of 20 billion shillings in tax revenue is expected to be collected from Gulu.