The Uganda Revenue Authority (URA) has refuted recent claims suggesting its intention to tax donations, including money and gifts, meant for cultural institutions. In a message posted on X, formerly Twitter, URA declared the allegations false and clarified that donations intended for cultural institutions remain tax-free.
However, a URA website post from December 29, 2023, explained the conditions for an item to qualify as a gift, emphasizing that it must be given voluntarily without the expectation of a reward and accepted by the recipient. The person making the donation is expected to account for applicable taxes, particularly when the donations are made by business entities.
For instance, if a business donates items purchased for business activities, it must account for Value-added Tax (VAT) on the supply and cannot deduct the expense for income tax purposes. Similarly, an individual making a donation to a constitutionally recognized cultural or traditional leader is supposed to account for applicable taxes, even if the recipient is exempt.
This clarification from URA comes as the government plans to allocate monthly funds of shillings 60 million to cultural institutions. The spokesperson of Inzu ya Masaba, Steven Masiga, expressed that this funding would support institutions preserving their culture, language, and cultural practices, as well as promoting beneficial programs.
The additional funding aims to assist cultural institutions that face challenges in investing in their development due to limited financial resources. Gender Minister Betty Amongi stated that the funds would be incorporated into the budget for the financial year 2024/2025 and utilized by institutions for poverty-fighting programs.
