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MPs question gov’t UGX500Bn tax arrears write-off for private firms

Deputy Speaker of Parliament, Rt. Hon. Jacob Oulanyah chairs the session as MPs question gov’t UGX500Bn tax arrears write-off for private firms. (PML Daily PHOTO)

KAMPALA – Deputy Speaker, Jacob Oulanyah tasked the Ministry of Finance to furnish Parliament with list detailing the services and works rendered by companies whose taxes are set to be written off.

The directive follows a tax policy proposal in the bill is to amend the Tax Procedures Code Act, 2014 tabled by State Minister for Planning, David Bahati to write off all unpaid taxes by government as at June 30, 2019, to empower the Commissioner General to compound offenses and to provide for a list of returns filed with the Commissioner General.

Mr. Bahati told Parliament that the tax arrears arose out of Governments’ commitment to pay taxes (customs duties and domestic 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.

The Minister added that in most donor projects, the obligation to pay taxes rests with the Government and that these particular arrears arose out of government’s commitment to pay tax component for a contract under counterpart funding arrangements and that in some cases, government has not met this obligation and as such, arrears have accrued.

Government argued that in some instances,  the arrears that accrued out of failure by some government entities to complete payments to contractors of government projects with the arrears hitting UGX499Bn.

Among the companies to benefit from tax write off bonanza are; Arab Contractors Limited who constructed Mulago Women Hospital project, Roko Construction Limited undertook works at Mulago Renovation projection, Cementer Limited construction of one stop border post Malaba and Busia, Dott Services Limited, Steel and Tubes Industries Ltd, Cipla Quality Chemical Industries Limited for the manufacture of antiretroviral therapy drugs.

The others are; Guangzhou Dongsong Energy Group for the Sukulu phosphates project, Oil Palm Uganda Limited, Southern Range Nyanza Ltd, Bugisu Cooperative Union, Aya Investment Uganda among others.

Mr. Bahati defended the decision arguing that when the budgeted funds for payment of these arrears, the budget proposal was rejected by Parliament yet the Committee of Finance has occasionally asked the Ministry of Finance to get these arrears off their book, which left Government with no choice but write off the arrears.

However, a section of MPs raised concern over the motive behind the write off with Muhammad Nsereko (Kampala Central) arguing; “We wouldn’t withhold this consent but not to individual companies that didn’t benefit duties. What we would like to seek is we would like you to be courteous and tell us what engagements these companies had with government. Several companies toil to pay these taxes, we are creating unfair competition in private companies.”

Winfred Niwagaba (Shadow Attorney General) also punched holes in the list submitted by the Ministry noting that the proposal in bill is taxes due for aid funded projects but the list has private business companies not known for aid activities.

He said: “What we must consider are those funds from government as aid funded projects the list submitted to us has tax holidays, can we get a proper list of aid funded projects and we pass that one for those others that aren’t part, how do you want us to continue throwing away money to benefit a few individuals.”

Deputy Speaker concurred with MPs and asked Bahati to avail Parliament with list of the services the said companies rendered to Government.

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