As Uganda edges closer to becoming an oil-producing nation, activities related to the oil sector have intensified, including the taxation of oil and associated goods.
According to a recent report by Accountant General Lawrence Semakula, these levies have significantly contributed to the country’s overall revenue.
The Ugandan newspaper, The Monitor, reported that Uganda generated an additional Shs44 billion from oil tax revenues during the financial year ending June 30, 2023.
The Petroleum Fund Report for the period indicated that Uganda made a total of Shs125.9 billion in oil tax revenues, representing a 54% increase from the previous year’s Shs81.9 billion.
The report also revealed that tax revenue constituted the largest percentage of the entire revenue at 94% (Shs118.6 billion), while non-tax revenues accounted for 6% (Shs7.4 billion).
The increase in tax revenue was driven by heightened activity in the oil sector, following Uganda’s efforts to fast-track its oil ambitions.
This included a final investment decision announced in February 2022 and the commencement of production well drilling in January 2023. The rise in corporate and withholding taxes resulted from this increased activity.
Additionally, a rise in surface rentals and training fees funded by the Ugandan National Oil Company (UNOC) and DGR Energy Turaco contributed to the non-tax revenues.
The report further showed that the value of the Petroleum Fund more than doubled from Shs121.1 billion to Shs246.6 billion during the period under review.
The Petroleum Fund currently operates three accounts: two with the Bank of Uganda and one with the Federal Reserve Bank of New York, opened on June 23, 2017.
The two accounts within Uganda are denominated in Ugandan Shillings, while the account in New York is denominated in USD.
This significant increase in oil tax revenues underscores the growing importance of the oil sector to Uganda’s economy and highlights the country’s progress towards becoming a major oil producer.
