MPs Challenge Gov't Proposal to Write off 499bn Tax Arrears

Members of Parliament have questioned the proposal by Government to write off close to 500 billion shillings in tax arrears.

The MPs were on Tuesday debating the Tax Procedures Code (Amendment) Bill, 2019 which seeks to amend the Tax Procedures Code Act, 2014, to write off all unpaid taxes by government as of 30th June 2019. 

It also seeks to empower the Commissioner-General to compound offences and to provide for a list of returns filed with the Commissioner General.    

In its report, the Finance committee of Parliament that was scrutinizing the bill recommended that Parliament approves the proposal to write off the billions of shillings in tax arrears.    

The tax arrears according to the committee arose out of Government's commitment to pay taxes (customs duties and domestic taxes) on behalf of entities deemed to be of strategic importance to the country and NGOs that had contractual obligations with Government.      

However MPs have questioned the decision by Parliament to write off these taxes, but also questioned why Government has to pay tax for private entities.    

According to the Minister of Finance in charge of planning, David Bahati, Government committed to pay taxes for the companies, but do not have money.  

He says they have updated the list of the taxpayers which Parliament requested, with documents supporting the companies like the Memorandum of understanding. He asked parliament to support the proposal.

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Muhammad Nsereko, the Kampala Central MP says it is agreeable that Government must honour commitment, but questioned why companies have been exempted from income tax and cooperation tax. 

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Jacob Oulanyah, the Deputy Speaker of Parliament questioned why Government agreed to pay tax on behalf of the investors. 

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Wilfred Niwagaba the Ndorwa East MP questioned why Government committed itself to pay the taxes to individuals who are earning income.

He says the matter should be thoroughly looked at as some people may be benefiting from this. 

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According to Bahati, Government committed to pay for the companies, since by then the law did not allow for tax exemption. He says Parliament rejected to budget for the tax arrears.   

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The debate, however, was deferred by the Speaker of Parliament Jacob Oulanyah now for the second time as members failed to agree.

The list of some of the companies that were meant to pay taxes are, Steel and Tube Industries Ltd, which has accumulated tax arrears worth Shillings 20.4 billion, Cipla Quality Chemical Industries Ltd Shillings 57.5 billion, Oil Palm Uganda Limited Shillings 41 billion and Shillings 134.7 billion, Southern Range Nyanza Ltd Shillings 86.8 billion, Fine Spinners Uganda Ltd Shillings 2.5 billion and Bugisu Cooperatives Union Shillings 279.1 million.  

Those under counterpart funding include Mulago Women Hospital Project undertaken by Arab Contractors Uganda Limited Shillings 28.3billion, Mulago Renovation Project by Roko Construction Limited Shillings 10.8 billion, Construction of One Stop Border Post Malaba and Busia by Cementers Limited Shillings 9.2 billion, road maintenance contract by Nippon Parts (U) Ltd Shillings 2.7 billion and rehabilitation of community roads by Azu Properties Limited Shillings 2.1 billion among others.