Uganda Government seeks Shs16.8b tax waivers amid MPs’ protest

Kampala — Parliament has questioned the transparency of Uganda’s tax waiver regime after the government sought approval to write off Shs16.84 billion in tax liabilities owed by three public and private entities.

The proposed waivers, tabled by Finance Minister Henry Musasizi during Tuesday’s plenary sitting, would benefit Ankole Western University, K-Roma Limited and the Uganda Printing and Publishing Corporation (UPPC).

If approved, UPPC would receive the largest relief of Shs13.95 billion, followed by K-Roma Limited with Shs1.86 billion and Ankole Western University with Shs1.03 billion in Pay As You Earn (PAYE) arrears.

However, the requests triggered concern among legislators, who questioned how beneficiaries are selected and whether all taxpayers have equal access to the process.

Patrick Nsamba (Kassanda North) said the system appears opaque and risks creating the impression that tax waivers are reserved for a privileged few.

“It is important that we have a broader discussion on tax waivers so that the public knows who qualifies and what procedures are followed. It should not appear to be a privilege for a select few,” Nsamba said.

His concerns were echoed by Joseph Ssewungu (Kalungu West), who questioned why only a handful of companies routinely appear before Parliament seeking tax relief while many businesses remain unaware of the process.

“We would like to know what procedure the minister uses to determine those who qualify to come before Parliament,” Ssewungu said.

Responding to the criticism, Musasizi acknowledged growing public concern over tax waivers and pledged to present Parliament with a comprehensive explanation of the legal framework, administrative procedures and eligibility criteria used to grant the relief.

“We want to achieve transparency in the way we do things,” Musasizi said.

“I want a businessman from Kassanda, who does not know any of us, to access our systems and qualify for a waiver in the same way as someone who may have connections or recommendations.”

Deputy Speaker Thomas Tayebwa welcomed the commitment, saying greater openness would strengthen public confidence in the country’s tax administration.

The latest applications come as government faces increasing pressure to expand domestic revenue collection to finance public services and reduce dependence on borrowing.

According to the Ministry of Finance’s Tax Expenditure Report for the 2023/24 financial year, Uganda forgone an estimated Shs3.61 trillion in revenue through tax exemptions, incentives, deductions and waivers.

The report shows tax expenditures have risen by about 46 per cent over the past five years, from Shs2.47 trillion in 2019/20 to Shs3.61 trillion in 2023/24. The revenue forgone accounted for 1.78 per cent of Uganda’s gross domestic product and 13 per cent of total tax collections during the year.

The Finance ministry has previously argued that tax waivers are intended to promote investment, preserve strategic enterprises and support sectors considered critical to national development. However, it has acknowledged that the actual cost of tax incentives may be higher because of gaps in available data.

Economists have long warned that while tax incentives can stimulate investment, poorly targeted exemptions can erode the tax base without delivering commensurate economic benefits.

Parliament is also expected to consider other tax waiver requests that lapsed with the dissolution of the 11th Parliament, including a proposal to write off about Shs18.86 billion owed by New Plan Limited, alongside applications by Fresh Cuts Uganda Limited and Innovations for Poverty Action.

This is likely to reignite debate over whether Uganda’s tax expenditure regime delivers sufficient economic returns to justify the growing revenue forgone by the Treasury.