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SACCOS protest tax levy

By Wilson Manishimwe

Added 16th May 2018 02:55 PM

The levy would deter growth and some members would be forced to keep their money in their homes.

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The levy would deter growth and some members would be forced to keep their money in their homes.

PIC: Niyonshima greets one of the co-operative members as Mugweri looks on. (Wilson Manishimwe)


TAXATION- Savings Credit and Co-operative Societies (SACCOS) have opposed the recent proposal by the Government to have them taxed 30% of net profit, saying the issue will further their collapse.

They argued that the levy would deter growth and some members would be forced to keep their money in their homes.

“The proposed taxes will affect the operation of these SACCOS because the profits of the co-operatives will also reduce.  SACCOS are for low-income earners who fear getting loans from banks, but with the tax levy, people will shun them,” said Kydeva SACCOS board chairman Edson Niyonshima.

During the SACCOS annual general meeting that took place at the Uganda Museum, Niyonshima said the Government introduced the idea of establishment of SACCOS to allow the low-income earners to save and get soft loans at low interest rates hence should not be taxed.

He said, however, with the tax levy, the rates will increase hence appealing to Members of the Parliament not to support the idea since it affects the public irrespective of the social status.

On Kydeva, Niyonshima said the SACCOS has registered tremendous growth in the last nine years since its inception. He said Kydeva has been able to survive by itself, offer loans to members when most of other SACCOS get money from the Government via micro finance support centres.

Kydeva is not the first SACCOS opposing the proposal. Recently, public and co-operative movement, led by Uganda Central Co-operative Saving Union, appeared before the Parliament finance committee expressing their dissatisfaction over the issue.

Ambrose Derrick Mugweri, the co-operative officer in the Ministry of Trade, Industry and Co-operatives, urged the public to stay calm as they wait for the Government’s decision over the issue.

“The idea of not taxing SACCOS was a directive by President Yoweri Museveni years ago to enable various members of the public get financial services at a low rate and there was an increase in numbers of people saving,” he said, adding that the taxation will in different ways affect the way they operate.

Recently, the finance ministry tabled a corporation tax levy on profitable SACCOS proposal before finance committee of Parliament aimed at generating about sh10b from them. However, it met stiff competition from the Members of Parliament. Corporation tax is a tax imposed on the net income of a company.

State Minister for Planning, David Bahati, who appeared before the Finance Committee of Parliament, said the reforms are aimed at helping the Government achieve its targets in line with the National Development Plan.

SACCOS member's view

Stephen Ndashimye, the managing director Safe Clean and Health Environment Managers (a company that does fumigation) and a member of different SACCOS, told journalists that co-operatives have been helping people get loans in time.

“The taxes are going to suffocate SACCOS members’ activities and this is in breach of the Government aims of ensuring prosperity for all. The Government should look for other means of widening the tax base without making the local person suffer,” said Ndashimye.


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