Ugandan Legislators Question Criteria for URA's Tax Waivers to Companies and Individuals

The Committee Chairperson, Hon. Amos Kankunda, directed the minister and URA to provide additional information on M/S J2E Investment Corporation Limited before a final decision on the waiver is made.

Members of the Committee of Finance have raised concerns regarding the Uganda Revenue Authority's (URA) process and criteria for extending tax waivers to various companies and individuals. During a committee session on Tuesday, 20 August 2024, the State Minister for Finance (General Duties), Hon. Henry Musasizi, revealed that tax waivers were being considered for eight organizations, including academic institutions and business entities.

Among the entities under scrutiny is M/S J2E Investment Corporation Limited, which is seeking a tax waiver of Shs2.718 billion as of 01 December 2023, including accumulated interest. The company is involved in construction works at Kawewe6a Military Training Barracks, and the waiver request stems from delays caused by investigations from the Inspector General of Government, which halted payments from the Ministry of Defence.

However, the waiver request has raised concerns among committee members. Hon. Patrick Ocan (UPC, Apac Municipality) questioned the legitimacy of granting a waiver to a company lacking audited accounts and articles of association, casting doubt on the company's existence and credibility. "Today, the minister has presented to us non-existent companies. If they are existent, I am sure the minister can provide the necessary documents for this company. How can we process a waiver for a company that is not known?" Ocan asked.

Kira Municipality MP, Hon. Ibrahim Ssemujju, and Hon. Maximus Ochai (NRM, West Budama County North) also pressed the minister and URA officials on the procedures followed in granting these tax waivers. Hon. Jane Pacuto (NRM, Pakwach District Woman Representative) sought clarification on why some companies were granted a 100 percent tax waiver and whether they met all the necessary criteria.

In response, Sarah Chelangat, Commissioner of Domestic Taxes at URA, explained that applications for tax waivers are assessed on a case-by-case basis, considering the broader impact of the business on the community. She noted that businesses like universities provide employment and, if granted relief, could contribute more in taxes in the future. Chelangat also addressed concerns about audited accounts, stating that self-assessment returns often summarize account information, and third-party information can be used for assessments.

The Committee Chairperson, Hon. Amos Kankunda, directed the minister and URA to provide additional information on M/S J2E Investment Corporation Limited before a final decision on the waiver is made.

Other individuals and entities listed for tax waivers include Donati Kananura, who sought waivers on rental income tax and Value Added Tax totaling Shs3.77 billion, as well as M/S Nicontra Limited, Busoga University, Nkumba University, Makerere Business Institute, Kisiizi Hospital Power Limited, and Mr. Peter Lokwang, a limestone mining dealer in Moroto District. Legislators questioned the justification for some of these waivers, particularly those granted on health and age grounds, leading to a debate on the appropriateness of such exemptions.