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Uganda: Baroda Shareholders Make Calls for Fair Taxes
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The Monitor (Kampala)
17 June 2008
Posted to the web 17 June 2008
Martin Luther Oketch
Kampala
Bank of Baroda shareholders have demanded that government should consider a making reduction in the withholding tax charged on dividends, reasoning that the tax is too high and that they are losing a lot of money as a result.
The issue of withholding tax charged on dividend became a contentious issue during the 38 annual general meeting of Bank Baroda of Uganda Limited held on June 2 at Sheraton Kampala Hotel, following the announcement by Bank of Baroda of Uganda Managing Director, Mr K.K. Shukla that the Board of Director have recommended dividend payment Shs70 per shares. There are 2000 shareholders in bank of Baroda, the total number of shares they hold various from person to person.
According to the recommendation by the Board of Directors payment of dividends is subjected to withholding tax at a rate of 10 per cent and 15 per cent for share owned by residents' individuals and others respectively.
Basic earning per share is calculated on the profit attributable to the shareholders and on the weighted average number of shares outstanding during the year. Bank of Baroda of Uganda shareholders argued that tax charged on dividends is too high when one compares it with what Kenya is charging.
Withholding tax charged on dividends in Kenya is 5 per cent how comes in Uganda the government is charging withholding tax in the range of 10 per cent to 15 per cent? They asked. "We want to see fairness and uniformity in tax administration because we are losing a lot money in tax," They argued.
Over the past four years bankers, insurance companies Capital Market Authority/ Uganda Securities Exchange and the players in the financial that is brokers' investment advisers and the fund managers have been asking government give incentives on listed companies on stock as away of encouraging investment in the capital market.
In order to finance public expenditure, the government must collect tax from businesses. However, investors discovered that the level of the tax burden and design of tax policy, including how it is administered has a direct impact business costs and returns on investments.
The shareholders said that the quality of country's investment policies directly influence the decisions of all investors be whether small or large, domestic or foreign. Adding that investments in buying company shares which is listed on the stock is very accommodative and flexible.
This, they said it is because it does not require so many procedures, but what is becoming a heavy burden is the high taxes charged on capital gains on the listed companies on the stock exchange.
The Board of Director recommended a total dividend payment of Shs2.8 billion. However, the noted with dismay that dividends paid per share stayed the same as it was in 2006 and yet the bank's profitability went considerably as such they expect their earning to keep rising.
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Responding to the issue raised, the Executive Director of Bank of Baroda global based in India, Mr. V. Santhanranman said that the bank decided to pay the same money as it was last year, because the bank is ploughing back the capital and it as laid down growth plans to be executed in 2008 and beyond.
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