In the Finance Bill of 2019, government eliminated goods and services tax (GST) waivers as part of duty waivers granted to all beneficiaries except international organisations and diplomatic missions covered by international conventions. As was contained in Executive Order No.1 including the rationalisation of duty and tax waivers, the government for the first three quarters of 2019 lost more than Le500 billion substantial revenues from tax and duty exemptions. Of this, 40.3 percent were those granted to international organisations, 23.5 percent to donor-funded projects, 10.6 percent to MDAs and 16.5 percent to private investors as revenue lost to import GST and customs duty waivers. In line with recommendations of the Review Committee on Duty and Tax Exemptions set up by the Ministry of Finance, a Duty and Tax Waiver Policy was developed and will be submitted to Cabinet for approval and subsequently a Duty and Tax Exemptions Bill will be tabled before Parliament for enactment. The aim is to rationalise and harmonise exemptions in order to minimise revenue loss and create a level playing field going forward. Consistent with this framework, Government says it will institute a review of the fiscal regimes in all existing agreements. In addition, the Ministry of Finance will soon conclude discussions with development partners on eliminating Duty and Tax Exemptions on all donor-funded projects.
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The UN estimates that Least Developed Countries need to raise their annual revenue collection to at least 20 percent of GDP in order to meet their basic primary expenditures. Records show that duty and GST waivers granted over the last couple of years surged from Le59.6 billion in 2004 to Le570.3 billion in 2017, with an increase of 53 percent between 2014 and 2017. This the Ministry says significantly undermined domestic revenue mobilisation during the period which they say is as a result of bad Agreements with wide-ranging waivers and exemptions signed by the previous Government and in many cases ratified by the then Parliament.
By Zainab Iyamide Joaque
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