MPs Push for Stricter Oversight on Tax Waivers

Lawmakers in Uganda’s Parliament have voiced strong concerns regarding the current system for issuing tax waivers and remissions, calling for more robust controls to prevent abuse and ensure accountability. The discussions arose during a parliamentary debate following a statement by the Minister of Finance, Planning and Economic Development, Hon. Henry Musasizi, on the procedures for accessing these tax reliefs.

Legislators questioned the adequacy of existing safeguards, with several MPs highlighting instances where tax relief appeared to be granted under questionable circumstances. Hon. Karim Masaba pointed out that some taxpayers seemingly have the financial capacity to pay taxes yet still receive waivers, questioning the definition of “hardship” used in the application process. He cited cases where individuals sought relief due to illness while continuing to profit from rental properties.

The issue of Pay As You Earn (PAYE) and withholding tax exemptions also drew scrutiny. MPs debated the logic of granting relief on taxes that employers have already collected on behalf of the government.

Concerns were also raised about tax reliefs granted through presidential directives, commonly known as “blue letters.” Dr. Wakida highlighted reports from the Auditor General and the Public Accounts Committee indicating substantial revenue losses due to the abuse of tax exemptions and waivers, with over Shs1.3 trillion reportedly unaccounted for in waivers during the 2024/25 fiscal year.

Leader of the Opposition, Hon. Joel Ssenyonyi, echoed the sentiment for clarity, particularly regarding the ambiguous criteria for hardship. He emphasized the need for post-waiver evaluations to assess whether the intended economic benefits, such as job creation and investment, were actually realized.

In response, Minister Musasizi acknowledged the importance of the MPs’ concerns and assured the House that controls are in place at multiple stages of the waiver process, involving the Uganda Revenue Authority (URA), the Ministry of Finance, and Parliament itself. He stated that loopholes are identified and addressed during these reviews.

This article is based on reporting from the Parliament of Uganda.