President Museveni has announced measures taken by government to mitigate the impact of COVID-19 on the private sector including providing liquidity to firms affected by the pandemic.
These include allowing corporations including small and medium sized enterprises (SMEs) to delay payment of corporation tax or presumptive tax for taxes due between April and June 2020 and for tourism, manufacturing, horticulture and floriculture to defer until September 2020.
Museveni, who delivered the State of the Nation Address on Thursday, said the Finance Minister proposes to defer payment of Pay-As-You Earn (PAYE) tax by those sectors which are most affected until September 2020.
Kasaija also intends to announce a waiver of interest on tax arrears and support to water and electricity utilities in order to ensure continued supply of these essential services to consumers during the period April to June 2020.
The Finance Minister also will expedite payment of outstanding VAT refunds and domestic arrears for goods and services supplied to Government by the private sector.
For those unable to pay their loans, said Museveni, “Government through the Bank of Uganda has already put in the gazette the measures to support businesses; including allowing extension of repayment periods, postponement of loan repayment for a limited period, relaxing the conditions for non-performing loans, reduction of reserve funds commercial banks are required to keep with Bank of Uganda and creating a special liquidity facility to rescue businesses that are not able to meet operational costs due to low demand or reduced production due to COVID-19.”
The measures come at a time Ugandans especially in the business world are demanding remedies to allow them cope with the devastating impact of COVID-19.
The Ugandan economy is being severely hit by the COVID-19 pandemic and, in particular, such key sectors as services (tourism), transport, construction, manufacturing and agriculture.
The challenging external environment is curtailing remittances and foreign direct investments. The pandemic has also exacerbated the challenges posed by heavy rains in early 2020 and the ongoing locust invasion.
The weakening economic conditions emanating from the Covid-19 pandemic have put significant pressures on revenue collection, expenditure, reserves and the exchange rate, creating urgent large external and fiscal financing needs.
President Museveni on Thursday said Kasaija proposed to capitalize Uganda Development Corporation (UDC) with Ug Shs. 100 billion to enable Government to invest in strategic areas; boost funding to Uganda Industrial Research Institute (UIRI) in FY 2020/21 to continue with innovation research and incubation of business start-ups; and secure funding for the development of Kampala Industrial Business Park at Namanve and for power transmission and substations for Mbale, Kapeeka, Bweyogerere, Kasese, Soroti, Luzira, Jinja and Mbarara industrial parks.
Other measures include provision of additional Shs 300 billion immediately to boost agricultural production and productivity for seedlings, fertilizers, irrigation, storage facilities and value addition.
“The target crops are coffee, cotton, tea, palm oil and other oil seeds, cassava, maize, cocoa and dairy, beef, and fish production,” said Museveni.
“All these efforts will be much easier when our Government scientists are paid well. They will be able to contribute to the economy without being distracted of having to survive when it comes to the basics of life,” he added.
“Our scientists must be paid at a level comparable to international standards, but of course, taking into account our low cost of living. The prices of food here and other products are much cheaper than in other parts of the World. This factor should be taken into account when fixing the salaries of scientists.”