The cost of tax incentives and exemptions in Uganda

Abstract

In the recent past, most governments have been actively promoting their countries as investment destinations to attract scarce private capital, associated technology and managerial skills in order to help achieve their development goals. As such, they offer preferential tax treatments in form of exemptions, tax holidays, credits, investment allowances, preferential tax rates and import tariffs (or customs duties) and deferral of tax liability. In Uganda, tax incentives are granted to mainly foreign investors targeting sectors government considers strategic to the growth of the economy. For example, sectors such as tourism, construction and those setting businesses in the industrial parks among others. On the other hand, Foreign Direct Investments is expected to provide jobs and contribute to future revenues in addition to technological and skills development.