MPs Question Shs 30 Billion Tax Waivers for Troubled Companies

Lawmakers on the Finance Committee have raised serious questions regarding a significant tax and arrears relief package valued at Shs 30.4 billion. This proposed financial reprieve targets two private companies, Fresh Cuts Uganda Limited and New Plan Uganda, along with the state-run Kilembe Mines Limited, which is in the process of winding down.

The requests, presented by the Minister of State for Planning Amos Lugoloobi and the Ministry of Energy, involve Shs 27.78 billion in tax remissions for Fresh Cuts and New Plan, and a Shs 2.6 billion write-off of unpaid mineral rents for Kilembe Mines.

These proposals come in the wake of the Auditor General’s report for the 2024/25 financial year, which highlighted systemic revenue losses due to tax reliefs and incentives. The report also noted widespread non-compliance and irregularities in high-profile waivers, suggesting that the benefits of such incentives might not always translate into tangible economic gains for the public.

Fresh Cuts, a meat-processing firm, is reportedly facing severe financial distress with a negative net worth, while New Plan, a consultancy firm, experienced a cash-flow crisis after losing crucial contracts. Kilembe Mines has struggled to revive copper production since taking over operations.

The government argues that the tax remissions are necessary to clear the companies’ balance sheets, enabling them to resume operations, preserve jobs, and eventually contribute to the tax base. However, MPs remain unconvinced, questioning the legal basis, the potential for recovery, and the concrete benefits taxpayers stand to gain from such significant waivers. Concerns were also voiced about the lack of transparency regarding the ownership structures of the private companies involved.

The Finance Committee is expected to present its report to the full Parliament soon, with the ultimate decision resting on whether the potential future tax revenues outweigh the immediate revenue forgone and the lack of clear public benefit. The fundamental question remains: what tangible returns will the Ugandan taxpayer receive from this substantial relief package?