2013/2014 East African Budget Highlights by Ernst and Young

1. 2013/14 East African
Budget Highlights
14 June 2013

2. Presenter
Sarah Chelang’at
Manager – Tax
Sarah.chelang’at@ug.ey.com

3. Agenda
►EAC Budget Highlights
►Economic Highlights
►2013/14 Budget themes
►Key Budget priorities for 2013/14
►2013/14 Tax proposals
14 June 2013Page 3 2013/14 East African Budget Highlights

4. EAC Budget Highlights
2013/14 Budget Theme:
Consolidating the EAC Common Market and
Moving towards the Monetary Union
2012/13 Theme:
Implementation of the Common Market and
laying the foundation for the Monetary Union
14 June 2013 2013/14 East African Budget HighlightsPage 4

5. EAC Budget Highlights
► 5.5% real GDP Growth
► Inflation reduced to 8.5% from 20.1%
► Policies/procedures adopted by Council in
2012/13:
► Review and alignment of the Common External Tariff
in accordance with international standards
► Adopted the Customs Procedures Manual
► Finalised and adopted EAC Customs Enforcement
and compliance regulations
14 June 2013 EAC 2013/14 Budget HighlightsPage 5

6. EAC Budget Highlights
► One stop Border Post Bill 2013 was passed by
the assembly
► EAC Customs Management (Amendment) Bill
2013 was also passed into law.
14 June 2013 EAC 2013/14 Budget HighlightsPage 6

7. Economic Highlights
14 June 2013 EAC 2013/14 Budget HighlightsPage 7

8. Economic Highlights- Basic Facts
Uganda Kenya Tanzania Rwanda
Population (2013
est)
34.5 M 42.8M 44.9M 11.6M
Area (Excl Water
Bodies) –000 Sq
KMs
199.8 580.7 886.3 26.3
Interest Rates-
Lending 24% 17.87% 17% 7.5%
14 June 2013 EAC 2013/14 Budget HighlightsPage 8

9. Economic Highlights- GDP
Comparisons
Uganda Kenya Tanzania Rwanda
Inflation 3.6% 5% 8.3% 3.3%
GDP Growth
Rate
5.1% 4.6% 6.9% 8%
GDP per
Capita(PPP)
USD*
1,300 1,774 1,500 1,400
*source Indexmundi.com- year 2011
14 June 2013 EAC 2013/14 Budget HighlightsPage 9

10. Economic Highlights- Sector Allocations
2013/14
Uganda Kenya
Works & 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. Economic Highlights- Financial Services
Uganda Kenya Tanzania
No. Of
Conventional
Banks
22 37 34
No. Of Agricultural
support Banks
1
Islamic Banking
0 5 4
14 June 2013 EAC 2013/14 Budget HighlightsPage 11

12. Economic Highlights- Resource Financing
2013/2014
Uganda
(USD M)
Kenya
(USD M)
Tanzania
(USD M)
Rwanda
(USD M)
Resource
envelope
5,114 19,305 7,060 2,526
Financing
Tax Revenues 3,296
12,084
6,590 1,532
Non Tax
Revenues
107 469 -
Other sources
679 6,432 243 -
External
support
1,033 788 1,076 1,014
14 June 2013 EAC 2013/14 Budget HighlightsPage 12

13. Tax Authorities’ Revenue
Performance
Uganda Kenya Tanzania Rwanda
USD M USD M USD M USD M
2013/14
-Projected
3,296 12,084 7,060 2,546
Historical Performance
2012/2013 2,778 10,141* 4,251 2,387
2011/2012 2,592 7,819 4,275
2010/2011 2,111 6,096 3,504
*estimates as at 30th
April 2013
14 June 2013 EAC 2013/14 Budget HighlightsPage 13

14. Ease of Doing Business- EAC Region
PARAMETER UGANDA KENYA TANZANIA RWANDA BURUNDI
Ease of Doing
Business Index
(Rank)
120 121 134 52 159
Corruption Index
(Rank)
130 139 102 50 165
Starting a Business
(Rank)
144 126 113 8 28
Starting a Business
(Number of days)
33 32 26 3 8
Number of
Procedures involved
in Starting Business
15 10 9 2 4
Ease of paying taxes
(Rank)
93 164 133 25 137
14 June 2013 EAC 2013/14 Budget HighlightsPage 14

15. Ease of Tax Compliance
14 June 2013 EAC 2013/14 Budget HighlightsPage 15
Uganda Kenya Tanzania Rwanda Burundi
Tax Rates
Corporation
Tax
30% 30% 30% 30% 35%
VAT 18% 16% 18% 18% 18%
WHT-
Residents
6% 5% 10% 5% 5%
WHT- Non-
Residents
15% 20% 15% 15% 15%

16. Ease of Tax Payment
14 June 2013 EAC 2013/14 Budget HighlightsPage 16
Uganda Kenya Tanzania Rwanda Burundi
On-line
Filing
Yes Yes Only VAT Yes No
On-line
payments
Yes Yes Yes Yes No
Number of Returns
VAT 12 12 12 12 12
PAYE 12 12 12 12 12
Income Tax 3 1 2 4 4
WHT 12 12 12 12 12

17. Budget Themes- Uganda
2013/14:
“The Journey Continues: Towards Socio-Economic
Transformation for Uganda”
2012/13
“Priorities for renewed economic development
and growth”
14 June 2013 EAC 2013/14 Budget HighlightsPage 17

18. Budget Themes- Kenya
2013/14:
“Transformation for Shared Prosperity”
2012/13
“Deepening our economic and social prosperity
within a system of devolved government”
14 June 2013 EAC 2013/14 Budget HighlightsPage 18

19. Budget Themes- Tanzania
2013/14:
To unlock social and economic opportunities for
sustainable development through
implementation of priority projects
2012/13
“To realise the goals of Tanzania development
vision 2025” MKUKUTA phase 2- MKAKATI WA
KUKUZA UCHUMI NA KUPUNGUZA UMASKINI”
14 June 2013 EAC 2013/14 Budget HighlightsPage 19

20. Budget Themes- Rwanda
2013/14:
“Striving for self reliance and dignity”.
2012/13
?
14 June 2013 EAC 2013/14 Budget HighlightsPage 20

21. 2013/14 Key Priorities: EAC
► Establishment of single customs territory
► Progressive implementation of the common
Market Protocol
► Implementation of the EAC Monetary Union
Protocol
► Establishment of a Free Trade Area under the
tripartite EAC-COMESA-SADC initiative
► Development of Cross Border Infrastructure
14 June 2013 EAC 2013/14 Budget HighlightsPage 21

22. 2013/14 Key Priorities: EAC
► Implementation of the EAC food security and
climate change master plan and EAC
industrialisation strategy
14 June 2013 EAC 2013/14 Budget HighlightsPage 22

23. 2013/14 Key Priorities: Uganda
14 June 2013 EAC 2013/14 Budget HighlightsPage 23
► Productive Infrastructure
► Agriculture Production and Productivity
► Human Resources Development especially in
technical skills

24. 2013/14 Key Priorities: Kenya
► Implementation of the new Constitution.
► Strategic interventions in all sectors of the
economy.
► Specific consideration to job creation for the
youth
14 June 2013 EAC 2013/14 Budget HighlightsPage 24

25. 2013/14 Key Priorities: Tanzania
► Infrastructure: - energy infrastructure;
transportation; ICT; clean water and sewerage
and irrigation;
► Agriculture: - including food and cash crops,
industrial raw materials, livestock, fisheries
and forestry;
► Industries:- which use domestic raw materials
and value addition, heavy industries for
fertilizers and cement, factories in the Special
Economic Zones, electronics and ICT;
14 June 2013 EAC 2013/14 Budget HighlightsPage 25

26. 2013/14 Key Priorities: Tanzania
► Human resources and skills development by
emphasizing science, technology and
innovations;
► Developing tourism, trade and financial
services; and
► Social services: improve the availability and
quality of social services.
14 June 2013 EAC 2013/14 Budget HighlightsPage 26

27. East African Tax Proposals
14 June 2013 EAC 2013/14 Budget HighlightsPage 27

28. INCOME TAX
Country Income tax proposals
Uganda ►Expansion of withholding tax agents
►Collaboration of URA, KCCA and Local
Governments
Kenya ►Tax exemption status for Persons with
Disabilities extended to five years.
►Exemptions for Premiums for Group Life
and Group Personal Accident policy covers
where they do not confer a benefit to the
employees.
14 June 2013 EAC 2013/14 Budget HighlightsPage 28

29. INCOME TAX
Country Income tax proposals
Kenya ►Withholding tax on winnings from
gaming and betting
Tanzania ►5% WHT on consultancy and other
services
► 10% WHT on commissions on money
transfers through the mobile phone.
►2% WHT on supplies to Government and
government institutions
14 June 2013 EAC 2013/14 Budget HighlightsPage 29

30. INCOME TAX
Country Income tax proposals
Tanzania ►Abolish exemption of WHT on rental
charges of aircraft lease paid to a
non-resident by a person engaged in
air transport business.
►Reduce the minimum tax rate
chargeable on income of a resident
individual for a year of income from
14 percent to 13 percent.
14 June 2013 EAC 2013/14 Budget HighlightsPage 30

31. INCOME TAX
Country Income tax proposals
Rwanda ►4% Royalty tax on value of extracted
Minerals
►6% royalty tax on precious metals
and stones
►Revision of Rwanda-Mauritius DTA
14 June 2013 EAC 2013/14 Budget HighlightsPage 31

32. VALUE ADDED TAX
Country Value Added Tax proposals
Uganda Elimination of VAT exemption on :
► Hotel accommodation
►Supply of Water for domestic use
►Wheat and flour
Kenya ►VAT exemption on supply goods
intended for dev’t of sports
Rwanda ►No VAT Amendments
14 June 2013 EAC 2013/14 Budget HighlightsPage 32

33. VALUE ADDED TAX
Country Value Added Tax proposals
Tanzania ►Abolish VAT exemption on tourism
services
► Special relief to domestic textiles
manufacturers using locally
produced cotton
14 June 2013 EAC 2013/14 Budget HighlightsPage 33

34. CUSTOMS AND EXCISE
Country Customs & Excise duty proposals
Uganda ►Additional excise duty of shs50 on
petrol and diesel
►Restore excise duty of shs200 on
Kerosene
►Increase excise duty on cigarettes
►10% duty on mobile money
transfer fees
14 June 2013 EAC 2013/14 Budget HighlightsPage 34

35. CUSTOMS AND EXCISE
Country Customs & Excise duty proposals
Uganda ►Increase excise duty on
undenatured spirits from 70% to
140% at importation
►Impose excise duty of 20% on
revenue from promotion activities
►Impose excise duty of 20% on
gambling activities
14 June 2013 EAC 2013/14 Budget HighlightsPage 35

36. CUSTOMS AND EXCISE
Country Customs & Excise duty proposals
Kenya ►Import duty exemption on items used to
facilitate railway transport
►Import duty increased on:
welding electrodes from 10% to 25%;
millstones and grindstones from 0%
to 25% ;
plastic tubes for packing of
toothpaste, cosmetics and similar
products from 10% to 25%
14 June 2013 EAC 2013/14 Budget HighlightsPage 36

37. CUSTOMS AND EXCISE
Country Customs & Excise duty proposals
Kenya ►Impose Customs warehouse rent for entered
goods which remain at the port of discharge for
a period exceeding 21 days.
►Exemption of import duty on Plastic bag bio-
gas digesters
Tanzania ►Increase excise duty on non-utility vehicles
aged more than 10 years from 20% to 25%
► 5% excise duty on utility vehicles aged, more
than 10 years under HS Code 87.01, 87.02 and
87.04.
14 June 2013 EAC 2013/14 Budget HighlightsPage 37

38. CUSTOMS AND EXCISE
Country Customs & Excise duty proposals
Tanzania Increase excise duty rates on petroleum
products :-
►Diesel (Gas Oil) from Tshs 215 per litre
to shillings 217 per litre
►Petrol (Motor Spirit Premium) from Tshs
339 per litre Tshs 400 per litre; and
►Duty on Kerosene (Illuminated
Kerosene) will not be affected by these
adjustments
14 June 2013 EAC 2013/14 Budget HighlightsPage 38

39. Stamp Duty and License fees
Country Customs & Excise duty proposals
Uganda ►Extra 30,000 stamp duty on third
party insurance policies for motor
vehicles
►Increase registration fees:
►Motor vehicles- shs 70,000
►Motor Cycles-shs 120,000
►Impose call levy on international
incoming calls.
14 June 2013 EAC 2013/14 Budget HighlightsPage 39

40. Stamp Duty and License fees
Country Customs & Excise duty proposals
Uganda ► implementation of revised NTR
rates
14 June 2013 EAC 2013/14 Budget HighlightsPage 40

41. SUMMARY OF PROPOSED REFORMS
Country Income
tax
VAT Excise
Duty
NTR Oil &
Gas
Uganda 2 3 7 4 1
Kenya 3 1 4 0 0
Tanzania 5 2 5 0 0
Rwanda 3 0 0 0 0
14 June 2013 EAC 2013/14 Budget HighlightsPage 41
*Details in Tax Amendment bills

42. CONCLUDING REMARKS
► Moving in right direction?
► Sector Priorities
► Budget Discipline- Supplementary Budgets
► Revenue administration efficiencies
14 June 2013 EAC 2013/14 Budget HighlightsPage 42

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