Members of Parliament on the Committee of Finance have raised concerns about the Uganda Revenue Authority’s (URA) process of extending tax waivers to companies and individuals, questioning both the criteria used and the manner in which these waivers are granted.
During a committee meeting held on Tuesday, 20 August 2024, the State Minister for Finance (General Duties), Hon. Henry Musasizi, informed the legislators that eight organizations, including academic institutions and business entities, are set to benefit from the tax waivers.
Among the companies under scrutiny is M/S J2E Investment Corporation Limited, which is seeking a tax waiver amounting to Shs2.718 billion as of 1 December 2023.
This company is involved in works at the Kaweweta Military Training Barracks. Musasizi revealed that the waiver request was initiated by the Defence Ministry in December 2019 after the contractor faced investigations from the Inspector General of Government, leading to the suspension of all works and payments by the Ministry of Defence. The suspension resulted in accumulated penalties and interest.
Hon. Patrick Ocan (UPC, Apac Municipality) questioned the legitimacy of granting a waiver to a company lacking audited accounts and articles of association. He expressed doubts about the existence of the company, challenging the minister to provide the necessary documentation to support the waiver request.
“How can we process a waiver for a company that is not known? How do we ascertain reputation and credibility?” Ocan asked.
Kira Municipality MP, Hon. Ibrahim Ssemujju, and Hon. Maximus Ochai (NRM, West Budama County North) also demanded clarity on the procedures followed by the URA in granting tax waivers to selected companies.
Hon. Jane Pacuto (NRM, Pakwach District Woman Representative) questioned why some companies were granted a 100 percent tax waiver and sought clarification on the criteria required to qualify for such a waiver.
“The minister chose to waive 100 percent, and I want to know why they chose to go in that direction,” Pacuto noted.
In response, Sarah Chelangat, the Commissioner of Domestic Taxes at URA, explained that applications for tax waivers are assessed on a case-by-case basis, taking into account the broader impact of the business on the community it serves.
She said that businesses like universities, which employ many people, may receive relief to ensure they can continue contributing to the economy in the future. Chelangat also addressed concerns about the absence of audited accounts, stating that self-assessment returns often summarize account information and that URA can obtain additional data from third parties, such as ministries.
The Committee Chairperson, Hon. Amos Kankunda, directed the minister and URA to provide comprehensive information on M/S J2E Investment Corporation Limited before a final decision is made on its waiver request.
In addition to M/S J2E Investment Corporation Limited, other individuals and entities seeking tax waivers were discussed. Among them was Donati Kananura, who sought waivers on rental income tax and Value Added Tax totaling Shs3.77 billion.
Legislators criticized the grounds for granting the waivers, which included health and advanced age, as insufficient. In response, Musasizi agreed to withdraw Kananura from the list to avoid further debate.
Other entities seeking tax waivers included M/S Nicontra Limited, Busoga University, Nkumba University, Makerere Business Institute, Kisiizi Hospital Power Limited, and Mr. Peter Lokwang, a limestone miner in Moroto District. The committee is expected to review these cases further before making a final report.
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