MPs question gov’t push for tax waivers over sh13 billion

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Lawmakers on Parliament’s Finance Committee have raised serious concerns over the government's proposal to exempt eight companies and individuals from paying taxes amounting to over sh13 billion.

The Members of Parliament questioned the rationale behind these exemptions, especially in light of the government's ongoing budgetary challenges.

During the committee meeting on Tuesday, officials from the Ministry of Finance, led by Henry Ariganyira Musasizi, the Minister of State for Finance, Planning, and Economic Development (General Duties), appeared before the Parliament's Finance Committee, chaired by Rwampara MP Amos Kankunda.

The ministry presented requests to grant tax waivers to eight entities, including Makerere Business Institute (sh239.3 million), Nkumba University (sh4.4 billion), Busoga University (sh783.1 million), Kisiizi Hospital Power Limited (sh77.7 million), M/S J2E Investment Corporation Limited (sh2.718 billion), Donati Kananura (sh3.7 billion), M/S Nicontra Limited (sh931 million), and Peter Lokwang (sh 385 million).

Musasizi cited various reasons for these waiver requests. 

He explained that Makerere Business Institute experienced low student enrolment post-COVID-19, while Nkumba University faced challenges including a 2014 strike, the COVID-19 pandemic, and a long-term loan with DFCU Bank amounting to sh5 billion.

According to the minister, Kananura, a real estate dealer, has been dealing with severe health issues, including diabetes, hypertension, prostate enlargement, and loss of sight, while Lokwang, a miner in Moroto District, claimed that mining in remote areas and the rejection of withholding taxes by artisans contributed to his financial strain.

For Busoga Universiry, he said it faced challenges of debt repayment since the government took over after its closure by the National Council for Higher Education in 2017. 

Musasizi also reported that Kisiizi Hospital Power Ltd, owned by Kisiizi Hospital and the North Kigezi Diocese, is struggling to repay a loan after flooding caused a total breakdown of their power generation infrastructure.

On Tuesday, the session took an interesting turn when Kiira Municipality MP Ibrahim Ssemujju Nganda questioned the ownership details of some companies, particularly J2E Investment Corporation. In response, Minister Musasizi admitted that he was unaware of the individuals behind the company.

“I will never doubt Musasizi’s competence both as minister and MP, he is one of those when they let me down, I feel bad, but how does he walk to Parliament to ask for a waiver for a company he doesn’t have details of ownership?” Ssemujju remarked.

The chairperson, Kankunda suggested that details of ownership, such as the Memoranda and Articles of Association, could be retrieved from the Uganda Registration Services Bureau (URSB) to address this issue.

“Most of the companies seeking tax waivers are acceptable since they are public institutions. However, J2E Investment Corporation has a troubling history, with repeated tax waivers since 2018. It seems like they are trying to avoid paying taxes altogether, which is concerning. Our country's survival depends on tax revenue, so we are highly skeptical of this request, especially given the lack of clarity around the company's ownership and financial documentation,” said Arua City MP Atima Jackson.

MPs also raised questions about the criteria used to award these tax waivers, noting that other companies facing similar challenges have not received such relief.

Sarah Chelangat, the Commissioner of Domestic Taxes at the Uganda Revenue Authority (URA), explained that applications for waivers undergo a thorough review process, including site visits and interviews with the taxpayers. She added that when financial difficulty is established, taxpayers are given time to pay, and only when this fails, the cases are forwarded to the legal department, which may then recommend waivers to the Ministry of Finance.

Minister Musasizi further clarified that any taxpayer seeking a waiver must submit their request to the Commissioner General of the Uganda Revenue Authority. Under Section 40 (1) of the Tax Procedures Code Act, the Commissioner General holds the authority to recommend taxpayers for waivers.

Mbale City MP Karim Masaba noted that, “If we grant a tax waiver because a taxpayer was sick, then what about the many other Ugandans who are also unwell? Illness is widespread, so using it as a reason for tax exemption could mean a large portion of Ugandans would qualify. Many people are struggling to pay their taxes, and the government has not provided them with similar relief. I believe the principles for granting tax waivers should be consistent and fair to all.”