Uganda ofers tax in­cen­tives to flower ex­porters in eco­nomic zones

The East African - - BUSINESS - By RAY­MOND TAMALE Spe­cial Correspondent

THE UGANDA Free Zones Authority has come up with in­cen­tives to at­tract in­vest­ment in the sec­tor. Flower farms Rose­bud and Premier Flori­cul­ture are the lat­est li­censees — the 10th and 11th — in the two years the agency has been in ex­is­tence. They were li­censed on Oc­to­ber 27.

The Authority was cre­ated by an Act of Par­lia­ment in 2014 to pro­mote fresh pro­duce ex­ports.

The lat­est ini­tia­tive, which of­fi­cials say is meant to boost ex­port rev­enues with a tar­get of at least $100 mil­lion in the next five years, has ben­e­fited pro­duc­ers and ex­porters, with seven of the 11 li­cences go­ing to flori­cul­tur­ists.

Of­fi­cials see flori­cul­ture as a high po­ten­tial sec­tor that does not need mas­sive in­vest­ment. The sec­tor brings in ex­port rev­enues of at least $30 mil­lion.

Kenya, the con­ti­nent’s third lead­ing ex­porter of cut flow­ers, pro­duces some 360 tonnes of cut flow­ers, earn­ing it the ti­tle of “the world’s flower gar­den.”

A key con­di­tion of the in­cen­tives is that new en­trants must guar­an­tee they will start pro­duc­tion within 12 months of re­ceiv­ing the li­cence while ex­ist­ing pro­duc­ers must com­mit to con­tin­ued pro­duc­tion.

Apart from ex­emp­tion from taxes and du­ties on all ex­port-pro­cess­ing zone im­ported in­puts, the gov­ern­ment is giv­ing a tax hol­i­day for 10 years on ex­por­ta­tion of fin­ished consumer and cap­i­tal goods, ex­emp­tion from tax on in­come from agro­pro­cess­ing, ex­emp­tion from cap­i­tal gains tax on plant and ma­chin­ery used in the free zones for five years and one day upon dis­posal; ex­emp­tion from all taxes, levies and rates on ex­ports from the zones and ex­emp­tion from taxes on per­sonal in­come of per­sons of­fer­ing tech­ni­cal as­sis­tance.

It of­fers a de­duc­tion of 50 per cent off the cost of prop­erty put into ser­vice for the first time out­side a ra­dius of 50km from the bound­aries of Kam­pala.

Non-fis­cal in­cen­tives in­clude ware­hous­ing and on­site Cus­toms in­spec­tion of build­ings, premises, ve­hi­cles, ves­sels and air­craft en­ter­ing and leav­ing the free zone.

Two li­censes were taken up by wood pro­duc­ers, two to phos­phate pro­duc­ers (Nilus Ltd, Uganda Wood Im­pex, Wa­ga­gai Flower Ltd, Jambo Roses, Fiduga Roses, Ugarose Ltd, Royal Van Zan­ten Ltd) and two to Dong Song Com­pany.

“In the past year we have re­ceived ap­pli­ca­tions from in­vestors in all sec­tors rang­ing from min­er­als to wood pro­duc­tion that are un­der­go­ing scru­tiny from the eval­u­a­tion com­mit­tee be­fore they are given a li­cense which usu­ally takes 30 days,” Kem­babazi told The East African.

“New in­vestors who are ap­proved for pro­duc­tion are re­quired to start pro­duc­tion within 12 months from li­cens­ing and for al­ready ex­ist­ing in­vestors they are re­quired to con­tinue with pro­duc­tion once they are given a de­vel­op­ers li­cense,” she said.

But there are chal­lenges in the flower busi­ness such as in­fla­tion, tough eco­nomic times in Europe, which is the pri­mary des­ti­na­tion for East Africa’s flow­ers and com­pe­ti­tion, es­pe­cially from Ethiopia and Kenya.

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