Members of the Civil Society addressing the press
Civil society activists have asked Parliament to reject a request by Ministry of Finance to gift Bujagali Hydro Power dam another tax exemption of five years, saying Uganda’s struggling economy can’t take on any more tax exemptions.
The plea was made by Henry Baziira, a member of Tax Justice Alliance while addressing journalists in Kampala to give their views on the nine proposed tax bills that were tabled by Government.
“Because of the exemption that was allocated to Bujagali, Government’s tax expenditure of money we have foregone is Shs108Bn as of 2019/2020 and it was Shs100Bn 2020/2021. These exemptions that are given are a huge cost to government and in order for them to renew the exemptions to Bujagali, they need to first do a study to assess the benefit of the exemption whether it is still justifiable for us to continue exempting Bujagali,” Baziira said.
He also rejected the proposal by the Ministry of Finance to have the income of a manufacturer, whose investment capital is, for over a period of at least ten years from the date of commencement of business, at least US$35 million for a foreign investor or US$5 million for an investor who is a citizen, who has capacity to source at least fifty percent of the locally produced raw materials, subject to availability; and capacity to employ a minimum of one hundred citizens, saying there is no justification for this exemption.
Regina Navuga, Tax Expert at Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda revealed that in the Ministry of Finance Tax Expenditure report 2020/2021, the estimated loss to tax exemption were to a tune of Shs7.7Trn and in the absence of the cost-benefit analysis on these exemptions, Parliament should drop this proposal.
While introducing the Income Tax Amendment Bill 2022, Henry Musasizi the Minister of State for General Duties proposed to amend section 21 of the Income Tax Act to extend the income tax exemption for Bujagali Hydro Power Project from 1st July 2022 to 30th June 2027.
If this proposal is approved by Parliament, it would mean Bujagali Hydro Project has been exempted for 20years with the first exemption coming for 10years, and the company received another exemption in 2017 for 5years, which ends in June 2022.
Navuga also welcomed the Amendment of section 89 of the Income Tax Act that will require players in the oil and gas sector to furnish a return or provide any other document within the time prescribed by this Act is liable to a penalty of not less than US$ 50,000 and not exceeding us$ 500,000.
She however asked to have the fine capped at US$ 50,000 arguing that giving the Commissioner General of Uganda Revenue Authority such powers would breed grounds for corruption and discrimination between URA and the oil giants.
Meanwhile, Speaker Anita Among has called the Finance Committee to finalise their reports on the tax bills to allow Parliament supply money in the budget so as to beat the 31st May deadline within which Parliament is supposed to pass the national budget.
