2024 / 2025 Financial Year Budget: Parliament Sneaks in Additional Tax on Fuel, Mineral Water, Cement and Cash Withdrawals.

Parliament passed into law the Excise Duty Amendment Bill 2024, increasing the fuel levy to Shs1550 per litre, from Shs1450 per liter. However, the Shs300 per liter on kerosene was rejected by MPs, citing Government’s failure to extend electricity to the rural areas, as a higher tax on kerosene would burden the poor more.

Parliament also rejected the proposal to impose a 75% excise duty rate on each liter of mineral water, describing the rate as too high & instead approved the rate of Shs50 per liter, in order to encourage investments into the sector.

MPs also approved the proposal to impose a levy of Shs500 per 50 kg of adhesives, grout, white cement or lime & this levy is already being charged on Cement.

Although MPs adopted the proposal to impose a 0.5% levy on cash withdraws on payment systems, they voted to have agency banking excluded from this category, in order to boost efforts of financial inclusion. The charge will now be imposed on new payment platforms like Chipper Cash, Wave etc.

MPs also approved the increase of the threshold for claiming for refund of overpaid tax from Shs5M to Shs10M. Gov’t had proposed the threshold to be increased to Shs50M.

However, Parliament rejected the proposal by Gov’t on grounds that increasing the threshold to such an amount will incapacitate Small and Medium Enterprises (SME's) from claiming for the overpaid tax, which will negatively affect their business. In the proposal, refunds below Shs10m shall be automatically carried forward to offset the output for the next financial year.

The proposal by Gov't to impose a penalty on withholding agent for failure to withhold tax was rejected by Parliament on grounds that such a proposal shifts URA’s mandate to the tax payers, yet all URA registered tax payers are required to issue EFRIS or invoices which are intended to give URA visibility of transactions by such tax Payers on grounds

The Ministry of Finance had initially proposed that a withholding agent who fails to withhold tax in accordance with this Act shall be personally liable to pay to the Commissioner the amount of tax which has not been withheld, but the withholding agent is entitled to recover this amount from the person.