Case file ITA-2019-BONDS10
Withholding tax on interest from long-term government securities cut to 10%; infrastructure bond interest exempted
Highest rung reached: Reported yieldLaw: read in a statutory textRate reduction · Investment and industry
1 point pending verification
- Confirmation that Act 13 of 2019 made the change, and the stated objective in the budget speech.
Law
- Principal Act
- Income Tax Act (Cap 338), enacted as Act 11 of 1997
- Amending Act
- Income Tax (Amendment) Act 2019 (Act 13 of 2019) (probable: the only amending Act in force from the right date, not confirmed)
- Provision, revised numbering (2023 revision)
- Sch. 4, Part IX, para. 3; s. 21, paragraph (af)
- Provision, numbering before the revision
- not stated in any source read
- Principal Act dates
- commencement 1997-07-01
- Amending Act in force from
- 2019-07-01
- Tax heads and taxpayers affected
- Income tax, Withholding tax. Holders of long-dated government securities and infrastructure bonds.
- Status
- Legal: in force. Implementation: implemented.
| Section A: The law | |
|---|---|
| Amending Act | Income Tax (Amendment) Act 2019 (Act 13 of 2019) |
| In force from | 1 July 2019 |
| Assent | pending |
| Section B: What the law said before | |
| The wording before and after is set out in the redline below. | |
| *** END OF CHANGE SLIP *** | |
The redline
as at 2019-06
Deleted: 20% withholding tax on long term Government bonds (10 years and above)Observed: A value or event as an official source records it, copied without calculation. described, not statutory wording[URA-ARR-1920, printed page 54, PDF page 61, Annex 3, item B3.0]
as at 2024-12-23
Inserted: 3. The withholding tax rate for interest payments on Government securities to a resident person under section 127 is-- (a) twenty percent for Government securities whose period of maturity does not exceed ten years; and (b) ten percent for Government securities whose period of maturity is at least ten years.Verified law: Wording or a date read in a statutory text, with the version and page named.[ULII-ITA-2024, printed page 84, PDF page 91, Schedule 4, Part IX, para. 3]
The struck text is URA's description of the rate before FY2019/20, not statutory wording. The underlined text is the current Schedule 4.
In plain English
Interpretation: A reading of the evidence, by a named source or by this register. Interest on government securities of ten years or more is taxed at half the rate of shorter ones, and interest on infrastructure bonds is exempt. No stated objective was found in the sources read; a cheaper market for long-term government borrowing is the obvious hypothesis, and it comes at a revenue cost.
Reason
Stated objective pending verification
Revenue
- Rung 1
Observed change
Observed: A value or event as an official source records it, copied without calculation.- Collections for the tax heads affected are drawn on the story page, from URA's annual data books. Before and after is never presented as this amendment's effect.
- Rung 2
Official forecast
Official forecast: What MoFPED or URA said a measure would raise, or why it was made, before the year began.- URA: UGX -24 bn expected in FY2019/20 (Withholding tax on long-term government bonds cut from 20% to 10%, and interest on infrastructure bonds exempted).[URA-ARR-1920, printed page 54, PDF page 61, Annex 3, item B3.0]
- Rung 3
Reported yield
Reported yield: What URA attributes to a measure after the year. An official attribution, not a causal estimate.- URA reports UGX -42.43 bn for FY2019/20, 176.79 percent of the forecast (computed).[URA-ARR-1920, printed page 54, PDF page 61, Annex 3, item B3.0]
- Rung 4
Static or modelled estimate
Modelled estimate: A mechanical or model calculation, with every assumption shown.Missing. No estimate made. A static estimate needs the taxable base before the change (volumes or values by product), which the register does not hold.
- Rung 5
Causal estimate
Causal estimate: An effect identified by a stated research design against a comparison group.Missing. No study with a defensible identification strategy was found for this amendment.
- Rung 6
Wider impact
Interpretation: A reading of the evidence, by a named source or by this register.- URA says the income tax gain expected for FY2019/20 did not materialise, and a loss was recorded predominantly because of this measure.[URA-ARR-1920, printed page 44, PDF page 51]
What is known, what is uncertain, and what would settle it
- Known: official forecast, reported yield, wider impact.
- Uncertain: static or modelled estimate, causal estimate; and 1 open point below.
- Would settle it: Request to MoFPED's Tax Policy Department for the revenue estimates of each tax measure in the budget speeches and the explanatory memoranda to the Finance Bills, FY2014/15 to FY2025/26. Held by Ministry of Finance, Planning and Economic Development (Tax Policy Department).
Pathway
From the amendment to its wider consequences. Select a link to read what supports it. No money is drawn along the chain, because no flow along it is measured.
Verified: A source read for the register documents this link.
The provision is read in the ULII consolidated text.
- amendment: verified. The provision is read in the ULII consolidated text.
- mechanism: verified. A lower rate on an existing base.
- implementation: verified. URA reports performance for the measure, so it was applied.
- response: no evidence. No source read describes how taxpayers responded.
- outcome: verified. URA reports a yield. It is an official attribution, not a causal estimate.
- wider: no evidence. No source read measures wider effects. No evidence found is not evidence of no effect.
Consequences
Graded against ten criteria. No composite score: a reform that raises money can still be regressive or costly to comply with, and one that loses revenue can serve a legitimate aim. Revenue effectiveness is graded by a stated rule; the rest only where a source speaks to them.
What worked
No criterion graded effective on the evidence read.
What did not
No criterion graded ineffective or counterproductive on the evidence read.
Open or not evaluated
Revenue effectiveness
The measure was not meant to raise revenue, or its direction is unknown.(graded by rule)
Not evaluated
Legal clarity and certainty
No source read for the register speaks to this criterion.
Not evaluated
Administrative feasibility
No source read for the register speaks to this criterion.
Not evaluated
Compliance cost
No source read for the register speaks to this criterion.
Not evaluated
Efficiency
No source read for the register speaks to this criterion.
Not evaluated
Investment and competitiveness
No source read for the register speaks to this criterion.
Not evaluated
Vertical and horizontal equity
No source read for the register speaks to this criterion.
Not evaluated
Distributional effect
No source read for the register speaks to this criterion.
Not evaluated
Implementation quality
No source read for the register speaks to this criterion.
Not evaluated
Unintended consequences
No source read for the register speaks to this criterion.
Not evaluated
Consequences on record
- Interpretation: A reading of the evidence, by a named source or by this register.URA says the income tax gain expected for FY2019/20 did not materialise, and a loss was recorded predominantly because of this measure.[URA-ARR-1920, printed page 44, PDF page 51]
Afterlife
No Tax Appeals Tribunal or court decision on this provision is on record yet. That is not evidence that none exists.
Pending verification
- Confirmation that Act 13 of 2019 made the change, and the stated objective in the budget speech.
Sources
URA-ARR-1920
Annual Revenue Report FY 2019/20
Uganda Revenue Authority. 2020. Covers FY2019/20.
Desktop/Personal/URA DATA BOOKS AND REVENUE REPORTS/Annual Revenve Report FY 2019-20.pdf
Status: verified. Pages confirmed for this record in the source audit: 51, 61 (PDF).
Table 20 (PDF page 50, printed 43) and Annex 3, the measure-level table (PDF pages 60 to 62, printed 53 to 55), read from page images. The file name misspells Revenue.
ULII-ITA-2024
Income Tax Act (Chapter 338), version of 23 December 2024
Uganda Legal Information Institute (ULII) and Laws.Africa, from the Law Reform Commission revision. 2024-12-23. Covers Text in force 23 December 2024 to 30 June 2025.
Desktop/Personal/Tax Legislation and URA Returns/Income Tax Act Cap 338.pdf
Status: verified. Pages confirmed for this record in the source audit: 91 (PDF).
Read in full with pdftotext. Lists amending Acts with commencement dates on PDF page 8. This version predates any 2025 amendment.
Corrections to this record
- 2026-10-21 Title shortened to "Withholding tax on interest from long-term government securities cut to 10%; infrastructure bond interest exempted". Was: "Withholding tax on interest from government securities of ten years or more cut from 20% to 10%, and interest on infrastructure bonds exempted". The title did not fit the docket; the facts are unchanged and the full terms remain in the record's provision and redline.