MPs approve sh12b tax waivers despite opposition

Parliament has approved a tax waiver bill amounting to shillings 12 billion, targeting seven individuals and companies, despite protests from some MPs.

On February 20, 2025, finance state minister in charge of general duties Henry Musasizi presented the request for the tax waiver.

House finance committee chairperson Amos Kankunda (Rwampara County, NRM) presented the committee's report on request.

"The approval of the tax remission by Parliament follows an amendment to the Tax Procedures Code Act of 2014. Before the amendment, the Minister of Finance was required to provide tax remission only after a referral from the commissioner general of the Uganda Revenue Authority," Kankunda explained.

He added that tax expenditures have been rising annually. However, when calculated as a percentage of GDP, they have remained relatively stable, standing at approximately 1.6% of GDP. Over the past five years, the value of revenue forgone relative to GDP has averaged 1.59%.

The Tax Procedures Code Act was amended in 2024 to extend the waiver of all interest and penalties from delayed tax payments.

Previously, the waiver was set to end on December 31, 2023, but it has now been extended to December 31, 2024. Under Section 40(D) of the Act, taxpayers who pay their principal taxes by December 31, 2024, will not be required to pay any accrued interest or penalties.

Despite the Government's justification, concerns about the fairness of these waivers were raised.

Muhammad Nsereko (Kampala Central, Independent) expressed his reservations, noting that many Ugandans are struggling with taxes and penalties.

Nsereko suggested that if the government is to grant tax waivers, it should consider offering a collective waiver that benefits all taxpayers who are facing hardships.

Muhammad further pointed out that over 1,500 businesses have collapsed in the aftermath of the COVID-19 pandemic, underscoring the economic challenges many are facing.

The tax waiver will benefit the following entities and individuals:

•           M/S J2E Limited: Value Added Tax (VAT) of shillings 2.7 billion

•           M/S Nicontra Ltd: VAT liability of shillings 931.9 million

•           Peter Lokwang: Withholding tax of shillings 237.7 million

•           Busoga University: Pay As You Earn (PAYE) tax of shillings 763 million

•           Makerere Business Institute: PAYE tax of shillings 239.3

•           Kananura Donati: VAT liability of shillings 1.14 billion

•           Nkumba University: PAYE liability of shillings 4.49 billion

•           Kisiizr Hospital Power Ltd: VAT of shillings 77 million

The Government extends various forms of tax relief to taxpayers to achieve different objectives, such as supporting investment, promoting local manufacturing, creating jobs, and addressing administrative challenges in collecting revenue from hard-to-tax sectors. These tax expenditures include exemptions, late reliefs, allowances, deferrals, and credits.

An analysis of revenue foregone from tax expenditures for FY 2022/23 stood at Sh2.972 trillion, representing 12.57% of the actual tax collected during the same period. The total estimated tax expenditures for FY 2024/25 (excluding interest on unpaid tax arrears) are projected to reach shillings 3.6 trillion.

While Parliament approved most of the tax waivers, it rejected a request for a waiver for one individual, Donati Kananura. The exact amount of the waiver sought for Kananura was not disclosed.