Parliament yesterday authorised government to write off Shs500b worth of tax waivers for at least 34 private companies and government agencies.

The government had granted the disputed waiver to selected big-ticket development projects on understanding that the money would be refunded to Uganda Revenue Authority using taxpayers’ money.

The proposal to write off Shs500b was contained in the Tax Procedures Code (amendment) Bill 2019 that the House adopted following a stormy debate with some legislators suspecting “collusion” with the beneficiaries.

State Minister for Planning David Bahati justified the write-off on account of lack of funds to pay off the taxes and the fact that Parliament has on several occasions blocked the taxes from being budgeted for.

“We came to this House and requested that we budget for these resources to pay off the taxes, in the wisdom of the House, you advised that we do not get this money to pay them off; we asked for permission to write them off but it was not granted [and] you again insisted that they should not continue to appear in the books of government as unpaid,” Mr Bahati said.

Mr Bahati also argued that with Parliament pressing the government to take the tax arrears off the record of Parliament, “there is no option rather than placing a humble bargain.”

After failing to secure the House nod on Tuesday, Mr Bahati returned to Parliament yesterday and this time triumphed.
“We have come back to appeal to this House that we make commitments when we are approving loans, that some of the resources under counterpart funding are actually taxes and must be paid or written off; this is why we are here to ensure that we get this approval and clean up our records properly,” Mr Bahati explained.
The House committee on Finance, in its report to Parliament, backed the government move, on the ground that the government incurred the arrears in the course of boosting the economy.

“The arrears arose out of government’s commitment to pay taxes on behalf of entities deemed to be of strategic importance to the country and on behalf of NGOs, which had contractual obligations with Government,” reads the committee’s observation in part.
The Finance committee chairperson, Mr Henry Musasizi (NRM) explained: “In most donor projects, the obligation to pay taxes rests with the government; these [arrears] arose out of Government’s commitment to pay a tax component for a contract under counterpart funding arrangements.”

List of beneficiaries
Company Amount (Shs)
Arab Contractors 28.33b
Roko Construction 10.8b
Uganda Cement 9.2b
Nippon Parts 2.8b
Azu Properties Ltd 2.1b
Dott Services 8.3b
Trade Mark 368.1m
SGI Studio Galli Consultancy 1.2b
Summit Project Limited 318.1m
Steel and Tube Industries Ltd 20b
Cipla quality Chemicals Industries 57b
Guangzhou Dongzhou Energy Grp 8.4b
Oil Palm Ug Ltd, Kalangala 41.06b
Oil Palm Ltd 134.7b
Southern Range Nyanza Ltd 86.8b
Ministry of Finance 86.8b
Fine Spinners 2.5m
Mutoni Construction 5.06b
Bugisu Cooperative union 2.3b
Ministry of Health 900m
Aya Investments 3b
Liao Shen Industrial Park 26b
Lydia Home Textiles 400m
Lilly Benefits Centre 2.3b
Office of the Prime Minister 29b
Ministry of Finance 300m
Great Value Investment Ltd 2.3b
Great Value Investment Ltd 55m
Cooperation and Devt Ug 345m
Oil Palm Uganda Limited 43m
All Nations Christian Care 10m
National Cement Company 2.5b
Ministry of Finance 389m