Finance Ministry Seeks Shs27.8 Billion Tax Waivers for Two Struggling Firms

The Ministry of Finance, Planning and Economic Development is seeking parliamentary approval for substantial tax waivers for two Ugandan companies, Fresh Cuts Uganda and New Plan Uganda. The total requested waiver amounts to Shs27.78 billion, intended to alleviate severe financial distress experienced by both entities.

State Minister for Planning, Hon. Amos Lugoloobi, presented the case to the House Committee on Finance. He explained that Fresh Cuts Uganda applied for a waiver on its outstanding tax liabilities from 2025 due to mounting financial hardships. Despite efforts by the Uganda Revenue Authority (URA), including demand notices and third-party agency actions, the company has been unable to settle its debts, particularly concerning Value Added Tax (VAT).

Fresh Cuts Uganda’s financial woes are underscored by a negative net worth of Shs22 billion in 2022 and significant loans from DFCU Bank and IBM. “We observe high indebtedness, inadequate working capital and negative net worth which collectively indicate a distressful financial position of the company, hence its inability to settle its tax obligations,” stated Hon. Lugoloobi.

Similarly, New Plan Uganda is seeking a waiver of Shs18.86 billion. The company’s financial stability was severely impacted by the termination of major client contracts, including those with Total Energies EP Uganda and Trans-African Pipeline Consultancy Uganda Limited. These cancellations led to a significant downturn in cash flow, preventing the company from meeting its tax commitments. New Plan Uganda also carries a substantial debt of Shs11.2 billion to DFCU bank, which has resulted in the sale of some of its assets.

Legislators raised critical questions regarding the long-term viability of these waivers and their potential benefit to government revenue. Concerns were voiced about whether these waivers would truly revive the companies or simply represent a loss of potential tax income. The committee has been urged to scrutinize these requests thoroughly before making a recommendation to the Parliament. Hon. Lugoloobi assured the committee that the Uganda Development Corporation (UDC) would provide financial support once tax issues are resolved.

Source: Parliament of Uganda