In June last year, government introduced 6 percent withholding tax on cane supplied to sugar factories.
Sugarcane farmers in Masindi are crying foul following the delayed payment by Kinyara Sugar Works for the cane they supplied to the factory last financial year.
Kinyara Sugar works withheld payment for 700,000 tons of sugarcane worth 46.6 billion shillings supplied by the farmers pending clearance from Uganda Revenue Authority-URA over the withholding tax.
In June last year, government introduced withholding tax levy on cane supplied to sugar factories. However, the farmers rejected the tax on grounds that it would make them poorer.
Robert Atugonza, the chairperson Masindi Sugarcane Growers Association says they agreed at a meeting held last week with URA officials led by Moses Kaggwa, the Commissioner for Domestic Taxes, to suspend the tax.
He however, says despite the agreement, Kinyara Sugar factory continuous to hold their payment. Atugonza says the delayed payment puts them in a financial mess as many of them have loans they have to service. He says some of the association members are losing property due to none payment of the loans.
Ravi Ramalingham, the acting Manager Kinyara Sugar Works says although the farmers have an agreement with URA, they are yet to receive a communication from the tax body regarding the suspension of the tax.