The Ministry of Finance has suggested tax waivers to eight entities in the country. The tax waiver is worth Shs13 billion.
Appearing before the Parliamentary Committee on Finance, Planning, and Economic Development, Henry Musasizi, the State Minister for Finance, said only eight entities have been shortlisted for tax waivers.
The eight include Makerere Business Institute owned by Kashari South MP Nathan Itungo, Nkumba University, J2E Investment Corporation Ltd., Donati Kananura, Nicontra Ltd., Peter Lokwang, Busoga University, and Kisiizi Hospital Power Ltd.
Makerere Business Institute
Musasizi said the institute applied for a waiver of taxes in August 2023. The institute claimed closure of schools during the 2-year lockdown during the #Covid-19 pandemic; there has been low enrolment of the students since the re-opening of the schools. The enrollment of students had fallen to 162 from 326 prior to the pandemic.
The amount recommended for waiver is Shs239 million, comprising an income tax of Shs131.7 million and Shs107.5 million.
Nkumba University
According to the minister, in March 2022, the university applied for a tax waiver of PAYE owing to financial constraints it was facing. They claimed the university faced a strike in 2014 in which much of the property was destroyed; student enrolment fell from 6,500 to 3,500, reducing cash inflows and the long-term loans with Dfcu bank to a tune of Shs5 billion payable in eight years.
The amount recommended for waiver is Shs 4.4 billion, which was PAYE principal tax and interest.
J2E Investment Corporation Ltd.
Established in 2010, their main contract was with the Ministry of Defence and Veterans Affairs (MoDVA) to do work at Kaweweta Millitary Training Barracks.
In December 2019, the Ministry of Defence and Veterans Affairs wrote to the Ministry of Finance, Planning, and Economic Development requesting a tax waiver. This was because during the implementation of the works, the contractor faced investigations from the Inspector General of Government (IGG) and suspended all works and payments due from the Ministry of Defence, resulting in penalties and interest.
“The contractor had now been cleared by all the investigations, and payments were approved. It was requested that interest accumulated be waived and the taxpayer pay the principal tax. The amount recommended for waiver as of December 2023 was Shs2.7 billion, which was interest accumulated,” the minister said.
Donati Kananura
This publication learnt that the applicant deals in real estate development and has been registered since 1996. The outstanding liability arose from assessments of Shs1.230 billion for rental tax and Shs1.285 billion for VAT.
He applied for an income tax and VAT waiver in December 2022 and January 2023. He claimed that he is of advanced age and has diabetes, pressure, prostate enlargement, and loss of sight. Most of his income goes into expenses related to these ailments.
The amount recommended for waiver as of September 2023 was Shs1.6 billion for rental income tax and Shs2 billion for VAT.
Nicontra Ltd
In January 2023, the company applied for a tax waiver over delayed payment by UNRA that resulted in accumulation of interest and penalty, highly indebted with loans from banks and borrowings from other unsecured lenders.
The amount recommended for waiver as of September 2023 was Shs931 million as VAT, comprising Shs537 million in principal tax and Shs394 million in interest.
Peter Lokwang
The minister said Lokwang is a registered taxpayer located in Moroto dealing in the mining of limestone. He has been registered since July 2006. An audit was carried out and completed in 2022, covering the period 2018 to 2021 and a withholding tax of Shs237 million was assessed.
“He applied for a waiver, claiming that he mines in remote areas of Moroto, and the artisans he uses to carry out the work are not willing to be charged withholding tax and neither are the drivers that offer him the transport services and therefore making it cumbersome for him to withhold and remit to URA,” Musasizi said.
The amount recommended for waiver in September 2023 was a withholding tax of Shs385 million, comprising a principal tax of Shs237 million and interest of Shs147 million.
Busoga University
The government took over the university in 2017 following its closure by the National Council for Higher Education. Before takeover, the Auditor General ascertained and confirmed that the university owed URA Shs763 million.
The minister said the Ministry of Education and Sports could not take over the debt due to budget constraints. The Ministry of Education and Sports therefore wrote to the Ministry of Finance, requesting a tax waiver in July 2023.
The university provided a memorandum of agreement between the government of Uganda and the registered trustees of the Church of Uganda and Busoga University on the takeover of the university. The MOU showed the government committed to taking over the agreed liabilities.
He noted that the amount recommended for waiver as of August 2023 was Shs783 million of PAYE, comprising Shs444.9 million as principal tax and Shs338.1 million as interest.
Kisiizi Hospital Power Ltd.
Owned by both Kisiizi Hospital and North Kigezi Diocese, the company generates power for the community around the hospital.
He noted that the company faced challenges resulting from the total breakdown of the infrastructure for power generation caused by flooding in the years 2017 and 2019. Taxpayers borrowed funds to repair the step-up transformer and are still struggling to pay the loan.
The amount recommended for waiver on June 28, 2024 was Shs77.6 million in VAT, comprising Shs38.9 million in principal taxes and Shs38.7 million in interest.
