By Mulengera Reporters
Parliament has approved a government proposal to waive taxes worth UGX9.614 billion owed by private businesses, arguing that the foregone taxes represent only 0.01% of the estimated UGX3.6 trillion in tax expenditures for the 2024/25 financial year.
The decision followed a report presented by Amos Kankunda, Chairperson of the Parliamentary Committee on Finance, during the plenary sitting on February 20, 2025.
“The seven taxpayer applications for tax waivers before Parliament total UGX12 billion. When granted, these waivers will constitute just 0.01% of the estimated tax expenditures for the financial year,” Kankunda stated.
Breakdown of Approved Tax Waivers
On March 15, 2024, Henry Musasizi, the Minister of State for Finance, tabled a request for tax waivers under Section 40(1) of the Tax Procedures Act, 2014. The request covered five businesses operating in education, construction, electricity, and real estate. However, Parliament approved only six out of the seven waiver requests.
Nkumba University (PAYE) – UGX4.47B
Nkumba University emerged as the biggest beneficiary, receiving a waiver due to financial strain caused by a sudden drop in student enrollment. Many students on private scholarships dropped out after their benefactors failed to pay tuition, forcing the university to downsize staff while struggling to meet gratuity obligations.
Kankunda noted that the university’s cash flow challenges led to delayed Pay As You Earn (PAYE) remittances, although it is now tax-compliant. The waiver will enable the institution to maintain its compliance and continue operations.
According to the Uganda Revenue Authority (URA), the university’s 2020 and 2021 financial records showed a rise in receivables and a decline in payables, indicating efforts to clear debts despite challenges in debt collection.
J2E Investment Corporation Ltd (VAT) – UGX2.71B
This construction firm, owned by Penninah Busingye (20%), Eria Mubiru (70%), and Jordan Magunga Kalenge (10%), handles UPDF training school projects under contracts with the Ministry of Defence & Veteran Affairs.
The waiver was granted after the Inspectorate of Government (IG) launched a protracted investigation in 2017, stalling the company’s operations and affecting its ability to complete works at the Kaweweta Recruits Training School.
“The government acknowledges that the project stalled through no fault of the contractor. The site’s incomplete and deteriorating structures require urgent resumption of works to avoid further losses,” Kankunda explained.
Parliament approved the waiver to help the company restore its capital base and creditworthiness, enabling it to secure funding to complete the project.
Nicontra Ltd (VAT) – UGX931M
A key player in road construction, Nicontra Ltd has been struggling with cash flow constraints due to delayed payments from the Uganda National Roads Authority (UNRA).
Company managers told the Finance Committee that URA had not notified them of outstanding interest and penalties, yet their payments were applied to principal tax dues instead of interest.
Busoga University (PAYE) – UGX783M
Following its takeover by the government, the Ministry of Education sought a tax waiver on behalf of Busoga University. The ministry argued that its budget constraints prevented it from settling outstanding tax obligations, given the university’s other financial liabilities.
Peter Lokwang (Withholding Tax) – UGX345M
Lokwang, a limestone supplier in Karamoja, faulted URA for failing to sensitize suppliers about withholding tax requirements before 2013. He argued that after receiving sensitization, suppliers began complying, and he has since been remitting taxes as a URA withholding agent.
Lokwang also accused URA of discriminatory practices, stating that other limestone buyers in Karamoja were neither registered withholding agents nor paying taxes.
While Parliament approved the waiver, it directed URA to register all mineral sector players to ensure fairness in tax obligations.
Makerere Business Institute Ltd (Income Tax) – UGX239M
The Finance Committee recommended a waiver for Makerere Business Institute, citing a sharp decline in student enrollment, which significantly affected its revenue.
“The institution is now tax-compliant. Granting this waiver will help it maintain compliance and continue operations,” Kankunda noted.
Kisiizi Hospital Power Ltd (VAT) – UGX77M
The least beneficiary on the list, Kisiizi Hospital Power Ltd, received a waiver due to its role in economic and social stability. The company supplies over 60W of electricity to Kisiizi Hospital and 500 households.
Kankunda emphasized that the company’s fixed costs had increased due to the replacement of aging electricity poles and an upcoming vending system upgrade worth UGX100M, required before November 2024.
Rejected Tax Waiver Request
Donati Kananura – UGX2.69B
Parliament rejected businessman Donati Kananura’s request for a waiver on UGX2.69 billion in unpaid Value Added Tax (UGX1.28B) and rental income tax (UGX1.14B).
Kananura cited diabetes, prostate enlargement, and loss of sight, claiming that most of his income was spent on medical expenses, leading to high debt levels from property investments.
However, MPs were unconvinced by these reasons, and the Finance Minister subsequently withdrew the request from Parliament.
“The committee was not convinced by the taxpayer’s justification. The minister therefore formally withdrew the request,” Kankunda stated.
Tax Waivers in Context
The August 2024 Tax Expenditure Report by the Ministry of Finance revealed that Uganda has foregone over UGX12 trillion in taxes over the past five years.
In FY2022/23 alone, the government recorded UGX2.97 trillion in tax expenditures. The report further noted that expenditures had increased by UGX893 billion from UGX2.07 trillion in FY2019/20 to UGX2.97 trillion in FY2022/23.
While the Finance Ministry admitted that tax waivers are necessary in certain cases, it acknowledged challenges in capturing accurate data on the actual cost of these waivers.
The latest tax waivers reflect Parliament’s selective approach in granting exemptions, favoring institutions facing financial distress while rejecting claims deemed unconvincing. However, the continued rise in tax expenditures raises concerns about fiscal discipline and revenue mobilization.
As Uganda foregoes billions in tax revenue, questions remain about whether these waivers translate into meaningful economic benefits—or simply widen gaps in government revenue collection-Parliament Watch. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
