By Our Reporter
The government has requested Parliament to grant tax exemptions totaling UGX13.391 billion to eight taxpayers, citing the economic impact of the COVID-19 pandemic and other factors like ill health. However, this request comes on the heels of a report revealing that Uganda has lost UGX12 trillion in five years due to similar tax waivers.
During the 29th August 2024 meeting with Parliament’s Finance Committee, Henry Musasizi, the Minister of State for Finance, presented a list of individuals and companies that the government wants to benefit from this tax relief.
The list includes Nkumba University, J2E Investment Corporation Limited, Nicontra Ltd, Kisiizi Hospital Power Ltd, Busoga University, and Makerere Business Institute. The individuals on the list are Peter Lokwang and Donati Kananura.
However, the meeting took a tense turn when Ibrahim Ssemujju, MP for Kira Municipality, questioned the lack of transparency regarding some of the companies. He particularly highlighted J2E Investment Corporation, which owes UGX2.718 billion and has strong ties to the military.
Ssemujju expressed concerns about the lack of information on the ownership and operations of J2E, which has been awarded numerous military construction contracts. The Minister admitted to not knowing the individuals behind this company.
Ssemujju also raised objections to the proposed tax waiver for businessman Donati Kananura, whose tax liability amounts to UGX3.776 billion. The waiver is being requested due to Kananura’s ill health, but Ssemujju questioned why someone who allegedly re-registered his buildings to avoid taxes should be exempted. Other MPs also questioned the criteria used to award these tax waivers.
Minister Musasizi explained that taxpayers can apply for a waiver if they face hardship or other difficulties, with the final decision being referred to Parliament after review by the Commissioner General of the Uganda Revenue Authority (URA).
However, Maximus Ochai, MP for West Budama North, criticized the lack of measurable indicators in the waiver process, making it difficult to assess the validity of these requests.
Ssemujju further argued that a government struggling to fund its own budget should not be exempting taxpayers from their obligations, especially given the Auditor General’s report showing that Uganda lost over UGX1 trillion in tax waivers last year, with no fulfillment of the conditions that justified those exemptions.
Glance Into Tax Waiver Beneficiaries
Makerere Business Institute:Â Facing UGX239.3 million in tax obligations, the Institute cited the COVID-19 lockdown and low student enrollment as reasons for the waiver request.
Nkumba University:Â Struggling with financial constraints due to a drop in enrollment and a UGX5 billion loan, Nkumba University requested a UGX4.479 billion tax waiver.
J2E Investment Corporation Ltd:Â With contracts tied to the Ministry of Defence, J2E seeks a UGX2.718 billion waiver, citing penalties and interest accrued during investigations by the Inspector General of Government.
Donati Kananura:Â A real estate dealer requesting a UGX3.776 billion waiver due to ill health and high indebtedness.Nicontra Ltd: This road construction company is requesting a UGX931.9 million waiver due to delayed government payments.
Peter Lokwang:Â A miner in remote Moroto, Lokwang is requesting a UGX385.1 million waiver due to difficulties in withholding taxes.
Busoga University:Â Owes UGX763.2 million, a debt the government inherited when it took over the university in 2017.Kisiizi Hospital Power Ltd: Seeking a UGX77.7 million waiver due to infrastructure damage from flooding, which has hampered their power generation project.
Uganda’s Increasing Tax Exemption Burden
This request for tax waivers comes as Uganda continues to grapple with the financial strain of tax exemptions. The Ministry of Finance’s 2022/23 Tax Expenditure Report revealed that UGX2.972 trillion was lost in tax exemptions, with projections for 2023/24 indicating potential losses of UGX3.418 trillion.
