RESTRICTED
WORLD TRADE G/SCM/Q2/UGA/2
23June1997
ORGANIZATION(97-2582)
Original: English Committee onSubsidies
andCountervailing Measures
SUBSIDIES
Replies ofUGANDA toQuestions Posed bythe
EUROPEAN COMMUNITY1Regarding theNewand
FullNotification ofUGANDA2
Thefollowing communication, received on17June1997, hasbeenreceived fromthePermanent
Mission ofUganda.
________________
Uganda submitted on16August 1996totheWTO thatitmaintained nosubsidies which require
notification pursuant toArticle XVI:1 GATT 1994andArticle 25oftheWTO Subsidies Agreement.
Inthisrespect, theEuropean Community hasobtained information ondifferent subsidy schemes
which were notnotified totheWTO although theirnotification appears toberequired pursuant to
Article 25.2oftheSubsidies Agreement.
SUBSIDY PROGRAMMES NOT NOTIFIED TOTHE WTO
Aforeign investor making acapital investment inqualifying fixed assets ofmore than
US$500,000, iseligible forthefollowing incentives:
(a) Duty drawback oninputs usedintheproduction ofexports.
(b) Exemption from corporate tax.
(c) Exemption from withholding tax.
(d) Exemption from taxondividends forperiods ofthree tosixyears depending onthe
amount ofinvestment andwhether thecompany islocated inapriority area.
Question
Could Uganda explain whythese programmes were notnotified totheWTO?
1G/SCM/Q2/UGA/1
2G/SCM/N/UGA/3G/SCM/Q2/UGA/2
Page2
Answer
These programmes were notified totheWTO butasTRIMS inconsistent withtheTRIMS
Agreement. Inthatnotification weexplained thattheUganda Investment Code isundergoing arevision
withaview toeliminating these inconsistencies. However itwasanoversight nottohavenotified
these programmes asasubsidy notification considering thedefinition ofasubsidy asprovided in
Article 1.1(a)(1).(ii) oftheAgreement onSubsidies andCountervailing Measures.
Question
Could Uganda supply anotification under Article 25,using thestandard format?
Answer
Yes. Weshallintheverynearfuture submit afullnotification under Article 25asprovided
inastandard form.
Question
Could Uganda clarify what thecriteria foreligibility are?
Answer
Thecriteria foreligibility aregiven inSection 23oftheUganda Investment Code Statute that
isalready notified totheWTO under theTRIMS Agreement. AcopyofthisStatute isappended for
easyreference.3
Question
With respect tothedutydrawback programme, could Uganda provide thetimetable of
howthese subsidies willbephased out?
Answer
Special anddifferential treatment isprovided fordeveloping countries under Article 27ofthe
Agreement andthedefinition ofdeveloping countries isprovided atAnnex II.Uganda qualifies as
adeveloping country andtheAgreement provides aperiod offiveyears from thedateofentry into
forceoftheWTO within which suchsubsidies havetobephased out.Weshallmeetthattimeschedule.
3ThefulltextoftheActisavailable forreview intheRules Division, Office 1028, Tel:7395109.G/SCM/Q2/UGA/2
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25January 1991
STATUTE SUPPLEMENTS
THE INVESTMENT CODE, 1991
..........
PART III-PROCEDURES FOR INVESTORS
Appraisal of
applications13. TheAuthority shallinconsidering anapplication foraninvestment licence
under thisCode, carry outanappraisal ofthecapacity oftheproposed business
enterprise tocontribute tothefollowing objectives -
(a) thegeneration ofnew earnings orsavings offoreign exchange
through exports, resource-based import substitution orservice
activities;
(b) theutilization oflocalmaterials, supplies andservices;
(c) thecreation ofemployment opportunities inUganda;
(2) TheAuthority shall, ifsatisfied with thereasons given under
subsection (1),extend thevalidity ofthelicence byaperiod itconsiders
reasonable.
(3)Where theholder ofaninvestment licence, foranyreason, ceases to
operate thebusiness enterprise towhich thelicence relates, heshall notify the
Authority inwriting andshallbeentitled toallrights andbeliable toallobligations
accrued under thisCode uptothedateheceases tooperate theenterprise andhis
licence shallbedeemed tohaveexpired onthatdate.
(4)Where aholder ofaninvestment licence doesnotcommence operations
within theperiod ofvalidity ofhislicence and-
(a) noapplication hasbeenmade foritsextension under sub-section (1);
and
(b) thelicence hasnotbeensurrendered under sub-section (3),
theAuthority may, subject totherights ofinnocent third parties, declare anything
done oranybenefit obtained under thelicence tobevoidabinitio andnotify the
holder ofthelicence accordingly.G/SCM/Q2/UGA/2
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.........
PART IV-FACILITIES AND INCENTIVES
Exemption of
investors from
import duties
andsales tax22. (1)Aninvestor intending tomake anewinvestment inUganda andfor
thatpurpose importing anyplant, machinery orconstruction material which isnot
available inUganda shallbeexempt from import duties andsalestaxotherwise
payable onthose goods:
Provided theplant, machinery orconstruction material isnotmore than
fiveyears old.
(2)Forthepurpose ofthissection, where thenewinvestment involves
twoormore phases, allthose phases shallbetreated asforming partofthenew
investment.
Enterprises
which qualify
forincentives23. (1) Aninvestor inabusiness enterprise, whocommences operation after
thecoming intoforce ofthisCode shallqualify forincentives under thispartif-
(a) hesatisfies three ormore oftheobjectives specified insection 13;
(b) inthecase ofaforeign investor, thatinvestor makes acapital
investment oranequivalent incapital goods worth atleast five
hundred thousand United States dollars bywayofcapital invested; or
(c) inthecaseofaninvestor whoisacitizen ofUganda, thevalue ofhis
investment isatleastfiftythousand United States dollars.
(2) Aforeign investor whoengages inanyactivity specified intheThird
Schedule shall notenjoy theincentives provided forinsection 25and
paragraphs (b)and(c)ofsubsection (1)ofsection 33.
(3) TheMinister may, bystatutory instrument, amend theThird Schedule.
Certificate of
incentives.24. (1) Aninvestor intending toavail himself ofincentives under thisPart
may, ifqualified inaccordance with section 23,apply totheAuthority fora
certificate ofincentives.
(2) Aforeign investor shallnotberequired tomake aseparate application
under thisPartifhisapplication foraninvestment licence made under PartIIIhe
provides therelevant information relating toincentives.G/SCM/Q2/UGA/2
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(3) Anapplication under thissection shallbeintheprescribed form and
shall-
(a) state thecategory orcategories ofqualifications under which the
applicant qualifies; and
(b) giveparticulars insupport ofthose qualifications.
(4) Where anapplication under thissection does notprovide allthe
information required orifclarification isrequired onanymatter, theapplicant may
berequired toprovide thatfurther information orclarification.
(5) TheAuthority shallwithin thirty daysafterthereceipt ofacompleted
application, issue acertificate ofincentives covering those incentives forwhich the
applicant qualifies.
(6) Every investor whoqualifies forincentives andwhose application for
acertificate ofincentives hasbeen approved bytheAuthority, shall beissued by
theAuthority acertificate ofincentives covering those incentives forwhich he
qualifies.
Common
incentives25. Aholder ofacertificate ofincentives shallbeentitled tothefollowing -
(a) exemption from corporation tax, withholding taxandtaxon
dividends -
(i) foraperiod ofthree years, inthecaseofaninvestment ofa
value notlessthanfiftythousand United States Dollars butnot
more thanthree hundred thousand United States Dollars; and
(ii) foraperiod offiveyears, inthecaseofaninvestment ofa
value greater thanthree hundred thousand United States Dollars;
(b) exemption from thetaxes provided forunder paragraph (a),foran
additional oneyearrespectively, inthecaseofaninvestor operating
inanyofthepriority areas specified intheSecond Schedule.
Firstarrival
privileges26. Aforeign investor whoholds aninvestment licence andhisexpatriate staff
shall beexempt from thepayment ofimport dutyandsales taxpayable onthe
following items imported within twelve months from thedateoffirstarrival -
(a) onemotor vehicle forhispersonal use; and
(b) personal andhousehold effects.
Additional
incentives -
forcertain
exporters27. Aholder ofacertificate ofincentives shall beentitled toadrawback of
duties andsalestaxpayable onimported inputs usedinproducing goods forexport
asprovided inanylawimposing suchduties ortaxes.G/SCM/Q2/UGA/2
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Obtaining
credit from
domestic
sources by
foreign
investors28. (1) Aforeign investor whoholds aninvestment licence mayinrelation to
thebusiness enterprises towhich thelicence relates, obtain credit from domestic
financial institutions uptothelimit established bytheBank ofUganda in
consultation withtheAuthority, having regard totheamount offoreign capital
invested inthebusiness enterprise.
(2) Aforeign investor who obtains credit inaccordance with
subsection (1)shall ensure thattheproceeds ofthatcredit areusedsolely forthe
purpose ofcarrying outtheactivities specified intheinvestment licence.
(3) TheAuthority mayforthepurposes ofthissection appoint itsofficer
oragent toverify dueapplication ofthecredit obtained under subsection (1).
.........