REVEALED: Why Government Seeks To Tax Bank Withdrawals
Government is considering taxing cash withdrawals from commercial banks, this website has established.
The move to increase the tax burden on Ugandans is contained in a letter dated 9th February 2021 authored by Deputy Secretary to the Treasury in Ministry of Finance to the Governor, Bank of Uganda.
“Following our budget consultative meeting held on February 5th, 2021, at this ministry of Finance attended by officials from Uganda Communications Commission, Uganda Revenue Authority, Telecom Operators and Bank of Uganda, it was proposed that we explore taxation of cash withdrawals, from commercial banks,” reads Patrick Ocailap’s letter.
In the letter, Ocailap further asks the Governor Bank of Uganda for his opinion on the proposal, and requests that he also avails data on different categories of withdrawals for further review and determination.
This website has however landed on exclusive information that the move to tax bank withdraws will encourage cashless transactions and promote e-commerce, and improve tax compliance in addition to raising revenue.
Currently, its only mobile money withdraws that are subject to a 0.5 per cent excise duty while agency banking and ATM withdraws in commercial banks are not subject to the same tax.
The move is also aimed at driving Uganda further into a cashless economy.
The Central Bank has indicated that achieving a cashless economy will take longer than planned, because about 75 per cent of payments in Uganda are still made through cash.
According to the 2019 Bank of Uganda annual report, local cash payments rose above the annual average of Shs423b to Shs544b. The growth represented an increase of 20 percent from Shs455b recorded for the F/Y that ended in June 2018.