URA’s call for their removal is likely to amplify long held suspicion on whether tax waivers are given out after thorough analysis to see if the country benefits. There are also questions on the companies that are chosen to benefit from these tax waivers
Uganda Revenue Authority-URA wants tax waivers removed, arguing it
has had no impact other than being a revenue leakage hole.
This is an unprecedented call from the revenue body, adding a voice to several
advocacy groups that have long argued that tax waivers don’t benefit the
Doris Akol, the URA commissioner general, says that they had looked at
companies that got tax advantages but hardly anything special they add to the
///Cue in: “Tax waivers is revenue lost…”
Cue out: “…leakage point”///
A tax waiver is when a company or an individual engaged in certain activity
where they supposed to pay are granted chance not to pay. This can be mainly to
make sure their business grows by re-investing the money that is supposed to pay
But URA’s call for their removal is likely to amplify long-held suspicion on
whether tax waivers are given out after thorough analysis to see if the country
benefits. There are also questions on the companies that are chosen to benefit
from these tax waivers.
Last year the amount of money lost due to tax exemptions in 2017/18 in
Uganda reached 1.4 trillion Uganda shillings, most from international trade tax
and Value Added Tax (VAT) related exemptions, according to civil society
Akol said tax waivers add undue advantage to companies getting them especially
when their counterparts in the same industry don’t have them.
///Cue in: “In as much as…”
Cue out: “…to continue encouraging the tax waivers”///
Regina Navuga, an expert on trade and taxation at the Southern and
Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda,
said they were not happy with the way the tax waivers were given out, asserting
they have long questioned the criteria used to choose companies benefiting.
Cue in: “Of course…”
Cue out: “…issues we need to think about”///
Tax exemptions in Uganda have long existed, falling within the tax laws
and those that are granted by the executive arm of government.
The waivers granted within the law are spelt out in the tax procedures code
annually. These exemptions apply to companies or individuals that fall in that
The waivers given discretionary and not grounded in the law are the problem.
Right from the time of former President Iddi Amin, a minister could
discretionary order that exemptions be given to a particular company or
Over the years, Uganda has witnessed a distinct move away from ministerial
discretion in the area of exemptions.
The exemptions, which are not provided for by statute, usually take the form of
the government paying taxes on behalf of taxpayers or simply waiving off the
In 2014, the Tax Procedures Code was amended to completely remove the
minister’s discretion to grant any exemptions.
SEATINI, an advocacy group, published a report in April 2019 showing that
despite the abolition of statutory ministerial discretion in tax matters,
government still issues tax waivers similar to the abolished ministerial
The report indicates even with those businesses deemed to be of strategic
importance, sometimes areas exempted do not directly relate to the company.
“In some instances, some tax heads that do not even directly relate to
the companies are also exempted such as PAYE. Government agencies are
instructed to pay PAYE taxes for contractors/ employees for some of these
companies,” SEATINI report quotes an interviewee.
The advocacy group found that two of the beneficiary companies were
found to have been exempted from almost all tax heads, including corporation
tax, VAT, Stamp duty, import duty and withholding taxes.
In June 2017, government paid 77.2 billion shillings to Uganda Revenue
Authority (URA) on behalf of seven private companies. In the financial year
2017/18, government was expected to pay 102.81 billion shillings.
A Parliament’s Budget Committee last year discovered that the majority
of the agreements between the companies and government on which these payments
were based were not grounded in the law or lacked supporting evidence.
On the other instances, some taxpayers both public and private that have
not complied with their tax obligations but URA is stopped from enforcing to
recover the money.
As at January 2018, up to nine companies fell in this category and the
tax body’s hands were tied and couldn’t recover it.
Paul Lakuma, a research fellow at the Economic Policy Research Centre,
said at times, a company is granted a tax holiday within the law but it
exploits it to extend or increase its tax advantages.
An April 2019 report, Lakuma found that some companies given tax holidays
in Uganda invest in the first four years. In the fifth year, their
investments start to fall and by the time they reach the tenth year, which is
usually the expiry year, some migrate while others change names.
Lakuma described these companies as "footloose firms"
literally meaning tax cheats.
"I have seen companies change names after-tax incentives have
expired," he told URN.
Navuga said they want URA and government to review these incentives every after
five years to see if the companies given are benefiting the country through
employment or increasing investment. If they are not, then they can be
Beyond tax waivers, Akol said they were investigating particular
multinationals who are trading with related companies based in notorious tax
Technically referred to as transfer pricing, companies report to have
received loans or services from related companies where they have to pay for
them and reduce their tax bills.