Members of Parliament (MPs) have strongly rejected government’s proposal to reinstate corporation tax on Savings and Credit Cooperative Organisations (SACCOs) making profits.
Government had exempted SACCOs from paying corporation tax up to June 30th 2027.
Government through Ministry of Finance had hoped to get Shs10bn from this new tax measure in the 2018/19 budget.
In the forthcoming financial year, government has come up with a number of tax measures to raise Shs16.2 trillion locally. The total budget for 2018/19 is Shs30.9 trillion.
The State Minister for Planning, David Bahati Tuesday appeared before the Finance Committee of Parliament to justify the measures and reforms, but found it hard to convince MPs on some of the tax measures.
MPs unanimously rejected reinstatement of the corporation tax on SACCOs noting that parliament last year resolved to exempt SACCOs for a period of 10 years in order to encourage savings.
MPs argued that SACCOs have enabled several citizens to access low cost loans without facing the wrath of banks who imprison loan defaulters.
Bahati’s argued that a blanket exemption on all SACCOs will be abused since successful businesses will register as SACCOs in order to dodge tax.
Meanwhile, the proposed Shs200 daily tax on WhatsApp, Facebook and Instagram users was received with skepticism by MPs.
According to government, the tax measure is expected to generate Shs284bn annually.
The Budadiri West MP Nathan Nandala Mafabi asked minister Bahati to clarify on whether this tax will not amount to double taxation since users already pay tax through purchase of airtime used to access the internet.
The Finance committee Chairperson Henry Musasizi asked the minister to appear before his committee on Thursday to illustrate how this tax will be implemented.
Other proposed tax measures include a Shs200 tax per liter of cooking oil, additional Shs100 on each litre of fuel to raise Shs200bn, 1% on mobile money transactions and 15% on Money transfers.