2013/14 EAC Budget Highlights

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2013/2014 East African Budget Highlights by Ernst and Young

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  • 14 June 2013
  • 2013/14 EAC Budget Highlights

    1. 1. 2013/14 East AfricanBudget Highlights14 June 2013
    2. 2. PresenterSarah Chelang’atManager – TaxSarah.chelang’at@ug.ey.com 
    3. 3. Agenda►EAC Budget Highlights►Economic Highlights►2013/14 Budget themes►Key Budget priorities for 2013/14►2013/14 Tax proposals14 June 2013Page 3 2013/14 East African Budget Highlights
    4. 4. EAC Budget Highlights2013/14 Budget Theme:Consolidating the EAC Common Market andMoving towards the Monetary Union2012/13 Theme:Implementation of the Common Market andlaying the foundation for the Monetary Union14 June 2013 2013/14 East African Budget HighlightsPage 4
    5. 5. EAC Budget Highlights► 5.5% real GDP Growth► Inflation reduced to 8.5% from 20.1%► Policies/procedures adopted by Council in2012/13:► Review and alignment of the Common External Tariffin accordance with international standards► Adopted the Customs Procedures Manual► Finalised and adopted EAC Customs Enforcementand compliance regulations14 June 2013 EAC 2013/14 Budget HighlightsPage 5
    6. 6. EAC Budget Highlights► One stop Border Post Bill 2013 was passed bythe assembly► EAC Customs Management (Amendment) Bill2013 was also passed into law.14 June 2013 EAC 2013/14 Budget HighlightsPage 6
    7. 7. Economic Highlights14 June 2013 EAC 2013/14 Budget HighlightsPage 7
    8. 8. Economic Highlights- Basic FactsUganda Kenya Tanzania RwandaPopulation (2013est)34.5 M 42.8M 44.9M 11.6MArea (Excl WaterBodies) –000 SqKMs199.8 580.7 886.3 26.3Interest Rates-Lending 24% 17.87% 17% 7.5%14 June 2013 EAC 2013/14 Budget HighlightsPage 8
    9. 9. Economic Highlights- GDPComparisonsUganda Kenya Tanzania RwandaInflation 3.6% 5% 8.3% 3.3%GDP GrowthRate5.1% 4.6% 6.9% 8%GDP perCapita(PPP)USD*1,300 1,774 1,500 1,400*source Indexmundi.com- year 201114 June 2013 EAC 2013/14 Budget HighlightsPage 9
    10. 10. Economic Highlights- Sector Allocations2013/14Uganda KenyaWorks & Transport 18.9%21%Energy 13.8%Education 12.3% 26%Public Sector Mgt & Admin 11.9% 13%Security 8.2% 7%Health 7.4% 3%Agriculture 3.0% 4%Tourism Trade and Industry 0.4% 2%Others 23.9 24%14 June 2013 EAC 2013/14 Budget HighlightsPage 10
    11. 11. Economic Highlights- Financial ServicesUganda Kenya TanzaniaNo. OfConventionalBanks22 37 34No. Of Agriculturalsupport Banks1Islamic Banking0 5 414 June 2013 EAC 2013/14 Budget HighlightsPage 11
    12. 12. Economic Highlights- Resource Financing2013/2014Uganda(USD M)Kenya(USD M)Tanzania(USD M)Rwanda(USD M)Resourceenvelope5,114 19,305 7,060 2,526FinancingTax Revenues 3,29612,0846,590 1,532Non TaxRevenues107 469 -Other sources679 6,432 243 -Externalsupport1,033 788 1,076 1,01414 June 2013 EAC 2013/14 Budget HighlightsPage 12
    13. 13. Tax Authorities’ RevenuePerformanceUganda Kenya Tanzania RwandaUSD M USD M USD M USD M2013/14-Projected3,296 12,084 7,060 2,546Historical Performance2012/2013 2,778 10,141* 4,251 2,3872011/2012 2,592 7,819 4,2752010/2011 2,111 6,096 3,504*estimates as at 30thApril 201314 June 2013 EAC 2013/14 Budget HighlightsPage 13
    14. 14. Ease of Doing Business- EAC RegionPARAMETER UGANDA KENYA TANZANIA RWANDA BURUNDIEase of DoingBusiness Index(Rank)120 121 134 52 159Corruption Index(Rank)130 139 102 50 165Starting a Business(Rank)144 126 113 8 28Starting a Business(Number of days)33 32 26 3 8Number ofProcedures involvedin Starting Business15 10 9 2 4Ease of paying taxes(Rank)93 164 133 25 13714 June 2013 EAC 2013/14 Budget HighlightsPage 14
    15. 15. Ease of Tax Compliance14 June 2013 EAC 2013/14 Budget HighlightsPage 15Uganda Kenya Tanzania Rwanda BurundiTax RatesCorporationTax30% 30% 30% 30% 35%VAT 18% 16% 18% 18% 18%WHT-Residents6% 5% 10% 5% 5%WHT- Non-Residents15% 20% 15% 15% 15%
    16. 16. Ease of Tax Payment14 June 2013 EAC 2013/14 Budget HighlightsPage 16Uganda Kenya Tanzania Rwanda BurundiOn-lineFilingYes Yes Only VAT Yes NoOn-linepaymentsYes Yes Yes Yes NoNumber of ReturnsVAT 12 12 12 12 12PAYE 12 12 12 12 12Income Tax 3 1 2 4 4WHT 12 12 12 12 12
    17. 17. Budget Themes- Uganda2013/14:“The Journey Continues: Towards Socio-EconomicTransformation for Uganda”2012/13“Priorities for renewed economic developmentand growth”14 June 2013 EAC 2013/14 Budget HighlightsPage 17
    18. 18. Budget Themes- Kenya2013/14:“Transformation for Shared Prosperity”2012/13“Deepening our economic and social prosperitywithin a system of devolved government”14 June 2013 EAC 2013/14 Budget HighlightsPage 18
    19. 19. Budget Themes- Tanzania2013/14:To unlock social and economic opportunities forsustainable development throughimplementation of priority projects2012/13“To realise the goals of Tanzania developmentvision 2025” MKUKUTA phase 2- MKAKATI WAKUKUZA UCHUMI NA KUPUNGUZA UMASKINI”14 June 2013 EAC 2013/14 Budget HighlightsPage 19
    20. 20. Budget Themes- Rwanda2013/14:“Striving for self reliance and dignity”.2012/13?14 June 2013 EAC 2013/14 Budget HighlightsPage 20
    21. 21. 2013/14 Key Priorities: EAC► Establishment of single customs territory► Progressive implementation of the commonMarket Protocol► Implementation of the EAC Monetary UnionProtocol► Establishment of a Free Trade Area under thetripartite EAC-COMESA-SADC initiative► Development of Cross Border Infrastructure14 June 2013 EAC 2013/14 Budget HighlightsPage 21
    22. 22. 2013/14 Key Priorities: EAC► Implementation of the EAC food security andclimate change master plan and EACindustrialisation strategy14 June 2013 EAC 2013/14 Budget HighlightsPage 22
    23. 23. 2013/14 Key Priorities: Uganda14 June 2013 EAC 2013/14 Budget HighlightsPage 23► Productive Infrastructure► Agriculture Production and Productivity► Human Resources Development especially intechnical skills
    24. 24. 2013/14 Key Priorities: Kenya► Implementation of the new Constitution.► Strategic interventions in all sectors of theeconomy.► Specific consideration to job creation for theyouth14 June 2013 EAC 2013/14 Budget HighlightsPage 24
    25. 25. 2013/14 Key Priorities: Tanzania► Infrastructure: - energy infrastructure;transportation; ICT; clean water and sewerageand irrigation;► Agriculture: - including food and cash crops,industrial raw materials, livestock, fisheriesand forestry;► Industries:- which use domestic raw materialsand value addition, heavy industries forfertilizers and cement, factories in the SpecialEconomic Zones, electronics and ICT;14 June 2013 EAC 2013/14 Budget HighlightsPage 25
    26. 26. 2013/14 Key Priorities: Tanzania► Human resources and skills development byemphasizing science, technology andinnovations;► Developing tourism, trade and financialservices; and► Social services: improve the availability andquality of social services.14 June 2013 EAC 2013/14 Budget HighlightsPage 26
    27. 27. East African Tax Proposals14 June 2013 EAC 2013/14 Budget HighlightsPage 27
    28. 28. INCOME TAXCountry Income tax proposalsUganda ►Expansion of withholding tax agents►Collaboration of URA, KCCA and LocalGovernmentsKenya ►Tax exemption status for Persons withDisabilities extended to five years.►Exemptions for Premiums for Group Lifeand Group Personal Accident policy coverswhere they do not confer a benefit to theemployees.14 June 2013 EAC 2013/14 Budget HighlightsPage 28
    29. 29. INCOME TAXCountry Income tax proposalsKenya ►Withholding tax on winnings fromgaming and bettingTanzania ►5% WHT on consultancy and otherservices► 10% WHT on commissions on moneytransfers through the mobile phone.►2% WHT on supplies to Government andgovernment institutions14 June 2013 EAC 2013/14 Budget HighlightsPage 29
    30. 30. INCOME TAXCountry Income tax proposalsTanzania ►Abolish exemption of WHT on rentalcharges of aircraft lease paid to anon-resident by a person engaged inair transport business.►Reduce the minimum tax ratechargeable on income of a residentindividual for a year of income from14 percent to 13 percent.14 June 2013 EAC 2013/14 Budget HighlightsPage 30
    31. 31. INCOME TAXCountry Income tax proposalsRwanda ►4% Royalty tax on value of extractedMinerals►6% royalty tax on precious metalsand stones►Revision of Rwanda-Mauritius DTA14 June 2013 EAC 2013/14 Budget HighlightsPage 31
    32. 32. VALUE ADDED TAXCountry Value Added Tax proposalsUganda Elimination of VAT exemption on :► Hotel accommodation►Supply of Water for domestic use►Wheat and flourKenya ►VAT exemption on supply goodsintended for dev’t of sportsRwanda ►No VAT Amendments14 June 2013 EAC 2013/14 Budget HighlightsPage 32
    33. 33. VALUE ADDED TAXCountry Value Added Tax proposalsTanzania ►Abolish VAT exemption on tourismservices► Special relief to domestic textilesmanufacturers using locallyproduced cotton14 June 2013 EAC 2013/14 Budget HighlightsPage 33
    34. 34. CUSTOMS AND EXCISECountry Customs & Excise duty proposalsUganda ►Additional excise duty of shs50 onpetrol and diesel►Restore excise duty of shs200 onKerosene►Increase excise duty on cigarettes►10% duty on mobile moneytransfer fees14 June 2013 EAC 2013/14 Budget HighlightsPage 34
    35. 35. CUSTOMS AND EXCISECountry Customs & Excise duty proposalsUganda ►Increase excise duty onundenatured spirits from 70% to140% at importation►Impose excise duty of 20% onrevenue from promotion activities►Impose excise duty of 20% ongambling activities14 June 2013 EAC 2013/14 Budget HighlightsPage 35
    36. 36. CUSTOMS AND EXCISECountry Customs & Excise duty proposalsKenya ►Import duty exemption on items used tofacilitate railway transport►Import duty increased on:welding electrodes from 10% to 25%;millstones and grindstones from 0%to 25% ;plastic tubes for packing oftoothpaste, cosmetics and similarproducts from 10% to 25%14 June 2013 EAC 2013/14 Budget HighlightsPage 36
    37. 37. CUSTOMS AND EXCISECountry Customs & Excise duty proposalsKenya ►Impose Customs warehouse rent for enteredgoods which remain at the port of discharge fora period exceeding 21 days.►Exemption of import duty on Plastic bag bio-gas digestersTanzania ►Increase excise duty on non-utility vehiclesaged more than 10 years from 20% to 25%► 5% excise duty on utility vehicles aged, morethan 10 years under HS Code 87.01, 87.02 and87.04.14 June 2013 EAC 2013/14 Budget HighlightsPage 37
    38. 38. CUSTOMS AND EXCISECountry Customs & Excise duty proposalsTanzania Increase excise duty rates on petroleumproducts :-►Diesel (Gas Oil) from Tshs 215 per litreto shillings 217 per litre►Petrol (Motor Spirit Premium) from Tshs339 per litre Tshs 400 per litre; and►Duty on Kerosene (IlluminatedKerosene) will not be affected by theseadjustments14 June 2013 EAC 2013/14 Budget HighlightsPage 38
    39. 39. Stamp Duty and License feesCountry Customs & Excise duty proposalsUganda ►Extra 30,000 stamp duty on thirdparty insurance policies for motorvehicles►Increase registration fees:►Motor vehicles- shs 70,000►Motor Cycles-shs 120,000►Impose call levy on internationalincoming calls.14 June 2013 EAC 2013/14 Budget HighlightsPage 39
    40. 40. Stamp Duty and License feesCountry Customs & Excise duty proposalsUganda ► implementation of revised NTRrates14 June 2013 EAC 2013/14 Budget HighlightsPage 40
    41. 41. SUMMARY OF PROPOSED REFORMSCountry IncometaxVAT ExciseDutyNTR Oil &GasUganda 2 3 7 4 1Kenya 3 1 4 0 0Tanzania 5 2 5 0 0Rwanda 3 0 0 0 014 June 2013 EAC 2013/14 Budget HighlightsPage 41*Details in Tax Amendment bills
    42. 42. CONCLUDING REMARKS► Moving in right direction?► Sector Priorities► Budget Discipline- Supplementary Budgets► Revenue administration efficiencies14 June 2013 EAC 2013/14 Budget HighlightsPage 42
    43. 43. Legal disclaimerwww.ey.com© 2013 Ernst & YoungAll Rights Reserved.EYG no. DL0031This publication contains information in summary form and is therefore intended for general guidanceonly. It is not intended to be a substitute for detailed research or the exercise of professional judgment..Ernst & Young does not accept any responsibility for loss occasioned to any person acting or refrainingfrom action as a result of any material in this publication. On any specific matter, reference should bemade to the appropriate advisor.
    44. 44. Thank you

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