Parliament has passed the Income Tax (Amendment) (No. 2) Bill, 2021 which provides for windfall tax and limitations of deductions on petroleum operations.
The bill, presented by Minister of State for Finance (General Duties), Henry Musasizi, was passed during plenary sitting on Tuesday, 14 December 2021, chaired by Deputy Speaker, Anita Among.
“I beg to report that the committee of the whole House has considered the bill and passed it without amendments,” presented Musasizi.
The Chairperson of the Committee on Finance, Hon Keefa Kiwanuka, said that the bill did not require any amendments.
“The committee has considered the bill and we found it straightforward. We recommend that it is approved as presented by the Executive,” said Kiwanuka.
The Shadow Minister for Finance, Hon Muwanga Kivumbi, said that all provisions of the bill are a result of the signed agreement where the country committed its self.
“We have little room for additions or subtractions and it enjoys our full backing,” Muwanga Kivumbi said.
According to the bill, the Income Tax Act is not specific on the cost recovery limit which a license can recover from petroleum operations in a given year.
The bill, therefore, seeks to cap the allowable deduction per year to the cost recovery limit stipulated in the Production Sharing Agreements.
“The current law does not cater for volatility in oil prices. There is, therefore, need for a windfall tax in the event that the international oil price equals US$ 75 per barrel or more on any day of the year of income,” reads the bill.
It further states that the intention is to capture the additional revenues arising in the event that international oil prices rise.