Legislators on the Finance Committee have raised concerns about the approach and criteria the Uganda Revenue Authority (URA) employs in granting tax waivers to companies and individuals. During his appearance before the committee, the State Minister for Finance (General Duties), Hon. Henry Musasizi, disclosed that tax waivers would be extended to eight organizations, including academic institutions and business entities.
Musasizi appeared before the committee on Tuesday, 20 August 2024. Among the companies under scrutiny by the committee is M/S J2E Investment Corporation Limited, which is seeking a tax waiver amounting to Shs2.718 billion as of 01 December 2023, covering accrued interest. M/S J2E Investment Corporation is undertaking works at Kawewe6a Military Training Barracks. The minister revealed that in December 2019, the Defence Ministry requested the waiver.
“This was due to investigations by the Inspector General of Government during the project implementation, which led to the suspension of all works and payments by the Ministry of Defence, resulting in penalties and interest,” Musasizi stated.
Hon. Patrick Ocan (UPC, Apac Municipality) questioned the lack of audited accounts and articles of association for the company, raising doubts about the legitimacy of granting a waiver.
“Today, the minister has presented to us companies that are either non-existent or questionable. If they do exist, I am confident the minister can provide the necessary documentation. How can we approve a waiver for a company that lacks credibility and reputation?” Ocan inquired.
Kira Municipality MP, Hon. Ibrahim Ssemujju, and Hon. Maximus Ochai (NRM, West Budama County North) pressed the minister and URA on the procedures followed in granting tax waivers to specific companies.
Hon. Jane Pacuto (NRM, Pakwach District Woman Representative) expressed concern over why some companies were granted a 100 percent tax waiver.
“I need clarification on whether an entity or individual must meet all the criteria or just part of it to qualify for a waiver. The minister also chose to grant a 100 percent waiver, and I want to understand the reasoning behind that decision,” Pacuto remarked.
Sarah Chelangat, the Commissioner for Domestic Taxes at URA, explained that applications for tax waivers are evaluated on a case-by-case basis, with companies given a grace period to pay the tax.
“We also consider the broader impact of the business on the community it serves. Businesses like universities provide employment, so if they receive relief, they can continue contributing more tax in the near future,” Chelangat explained.
She further clarified the issue of audited accounts, stating, “When a taxpayer files a self-assessment return, they typically summarize all their financial information in their tax returns. Sometimes, we assess based on third-party information, for instance, if the taxpayer works with a ministry, we can obtain the information from that ministry.”
The Committee Chairperson, Hon. Amos Kankunda, instructed the minister and URA to submit the required information on M/S J2E Investment Corporation Limited to the committee before a final report on its waiver is made.
Other individuals listed for tax waivers include Donati Kananura, who, as of 12 September 2023, sought a waiver on rental income tax amounting to Shs1.69 billion and a waiver on Value Added Tax amounting to Shs2.08 billion. Legislators argued that the reasons URA provided for granting the tax waivers, including health and advanced age, were not justified.
“I want to withdraw Donati Kananura from my list to minimize debate on this matter. We will explore alternative means to assist him,” Musasizi responded.
Other entities presented before the committee for tax waivers included M/S Nicontra Limited, Busoga University, Nkumba University, Makerere Business Institute, Kisiizi Hospital Power Limited, and Mr. Peter Lokwang, a limestone mining dealer in Moroto District.
