Parliament has moved to block the approval of a Ushs 47.7 billion tax waiver in the Supplementary Expenditure of the Financial Year 2016/2017.
The decision followed a recommendation in a report of the Budget Committee on the Supplementary Expenditure that out of the Ushs 77.2 billion released for tax expenditure; Ushs 47.7 billion which was a tax waiver, should be treated as a loss of public funds and should be recovered from the companies that benefitted from it.
The Committee found that the circumstances and procedures followed by the Ministry of Finance in granting the exemption are not legally supported with documentation.
The affected companies include; BIDCO, Aya Investments, Quality Chemicals, Steel and Tube, and Southern Range Nyanza.
In support of the Committee, while addressing the house on Thursday 1st May, 2017, Hon. Muwanga Kivumbi (Butambala County) said that the Committee had exhaustively interacted with the Ministry Officials and asked for all the documentation, but they did not find it satisfactory.
“Corporate tax waivers on companies like BIDCO lacked proper documentation and therefore the Committee had every right to decline that tax waiver; Corporate Tax cannot be exempted and even if it is, it should be done through the Parliament,” Kivumbi argued.
Hon. Elijah Okupa (Kasilo County) added that tax waivers should be directed towards the local companies instead of foreign companies.
“We need to inculcate the practice of Buy Uganda Build Uganda; we have so many local companies which are struggling with taxes to break even, these companies should be given tax waivers instead of granting them to the foreign companies which are financially strong,” Okupa noted.
In addition, Hon. Odonga Otto (Aruu County) said that when the foreign companies come they are granted many favourable conditions to establish themselves and therefore granting them tax waivers is largely unnecessary.
“When BIDCO was being established President H.E Yoweri Museveni, he talked to the MPs from Kalangala to go and encourage the locals to sell their land cheaply to the company so that it would set up large Palm Oil plantations. However, the President discouraged them from abusing the hospitality accorded to them and asked them to work in the interest of the locals,” Otto said, adding that, “Granting BIDCO tax waivers would be contrary to the expectations of the President.”
Otto added that the foreign companies looking to invest within the country should not hold the government at ransom.
In response, The Minister of State for Finance, Hon. David Bahati asked that the government is granted more time to provide more documentation before Parliament totally declines the tax waiver.
“The Ministry followed all the proper procedures in granting the tax waivers and there is documentation to support that. I ask to be granted more time to provide the documents authorising the waivers,” Bahati said.
The Deputy Speaker, Rt. Hon. Jacob Oulanyah who was presiding over the plenary session ruled that the matter is put on hold until the Minister provides the documentation to Parliament before the end of the financial year 2016/2017.