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Government seeks to tax cash withdrawals from banks

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The Government of Uganda has proposed the introduction of a new tax that will be charged on all withdrawals from commercial banks.

In a letter written to the Governor of the Bank of Uganda, the Deputy Permanent Secretary of the Ministry of Finance, Patrick Ocailip, has asked the Governor of the Bank of Uganda to share his views on the proposed tax.

“Following our budget consultative meeting held on February 5th, 2021, at this ministry [of Finance] attended by officials from Uganda Communications Commission, Ugandan Revenue Authority, Telecom Operators and Bank of Uganda, it was proposed that we explore taxation of cash withdrawals, from commercial banks,” reads part of the letter dated February 9, 2021.

In the letter, Ocailip further tells the Governor, that the ministry wishes to seek his opinion on the proposal, and requests that he also avails data on different categories of withdrawals for further review and determination.

The proposal to tax cash withdrawals was reached at last week in a budget consultative meeting between the finance ministry and other stakeholders such as the Uganda Revenue Authority (URA), Uganda Communications Commission (UCC), telecom operators and Bank of Uganda (BoU). 

This, according to the government, will encourage cashless transactions and promote e-commerce, improve tax compliance in addition to raising revenue. 

Currently, mobile money withdrawals are subject to a 0.5 per cent excise duty while agency banking and ATM withdrawals in commercial banks are not subject to the same tax.

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Arnold Nkalubo
Arnold Nkalubo is a writer and editor with an exceptional interest in issues that influence passion and lifestyle.