Gov’t earns sh180b from oil taxes despite exemptions

Uganda Revenue Authority (URA) Commissioner for Domestic Taxes Sarah Chelangat, in an update of the half year revenue performance, noted that revenues collected from oil-related activities were largely composed of heads such as Pay As You Earn (PAYE), and Withholding Tax from tier one and two companies, signaling that more contributions are expected from the sector as activities increase.

However, some tax experts have questioned the figure in comparison to the $4b (sh5 trillion) investment injected into the sector since the signing of the Final Investment Decision, about a year ago. 

A Tax expert, who preferred to speak on condition of anonymity, said the sh180b was “little” compared to the several oil contracts signed under three different company tiers offering goods and services in the sector, and the more than 6,000 oil and gas employees. 

In April last year, URA Commissioner General John Rujoki, estimated that oil activities could raise sh2.5 trillion before flow of first oil with an additional sh4.4 trillion coming in when oil begins to flow. 

Between 2017 and 2021, data from Petroleum Authority of Uganda shows that a total of sh577m was paid by five oil companies licensed in the country in the form of Income Tax, PAYE, Stamp Duty, Value Added Tax and Withholding Tax.

Juliet Najjinda, a senior manager, tax services at PwC, attributed the low revenue collection to exemptions.