The cost of building in Uganda to go up in tax plan

Construction in progress at Akright, one of Uganda's real Estate projects in Wakiso. The cost of building in Uganda to go up in tax plan. PHOTO | MORGAN MBABAZI | NMG 

In Summary

• Proposed amendments to the tax laws show that granite and marble tiles will attract an applicable duty of 35pc, up from 25pc.
• The materials affected are iron sheets, galvanised coil, hoop iron, twisted bars, flat bars and mild steel.
• Construction is a dominant sector in the economy as seen in the boom in building of residential and commercial space and big infrastructure projects.

By HALIMA ABDALLAH
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The cost of construction in Uganda could rise in the coming financial year, if parliament passes a proposal by the government to increase taxes on imported materials in a bid to promote the consumption of locally produced goods.

Proposed amendments to the tax laws for financial year 2019/2020 show that granite and marble tiles will attract an applicable duty of 35 per cent, up from 25 per cent.

The Ministry of Finance has also introduced a new charge on flat rolled products of iron and non-alloy steel, with traders set to be charged up to $350 per tonne — equal to the 25 per cent charged under the East African Community common external tariff.

The materials affected are iron sheets, galvanised coil, hoop iron, twisted bars, flat bars and mild steel.

Construction is a dominant sector in the economy as seen in the boom in building of residential and commercial space, infrastructure projects like roads, airports and container depots, even as the National Planning Authority estimates that the country’s housing deficit stands at 8 million units.

Besides the taxes, the government has also passed a policy that will see previously neglected development minerals that have low value in international commodity markets, yet provide crucial inputs for domestic construction, listed as minerals. These include murram, sand, rocks, gravel, slate and laterite.

Once treated as minerals, the commodities will attract royalties and related taxes that will push up their prices.

Taxes on other goods

The government also seeks to increase duty on imported foods and drinks such as mineral water, tomato sauce, cocoa, refined cooking oils, garlic, frozen meats, jam, processed tea, coffee, chocolate, confectioneries, chewing gum and peanut butter to 35 per cent.

Beauty products like artificial hair, imported cosmetic soaps, trade advertising materials, exercise books, instructional materials, furniture and televisions sets have seen their duty increased.