Parliament Grants Shs8.7 Billion Tax Waiver to Fresh Cuts Uganda Limited

Lawmakers in Uganda’s Parliament have granted a significant tax waiver amounting to Shs8.7 billion to Fresh Cuts Uganda Limited, a local meat exporter. The approval came during a plenary session, though it was met with debate regarding the company’s justification for such relief.

The Committee on Finance, Planning and Economic Development had recommended the waiver, citing that Fresh Cuts Uganda Limited faced considerable financial hardship. The committee found that the company, which employs 110 people and supports numerous farmers, had accumulated arrears in salaries, Pay As You Earn (PAYE), and National Social Security Fund (NSSF) contributions. In 2022, the company’s liabilities reportedly outweighed its assets, leading a shareholder to write off a substantial loan in an effort to salvage the business.

According to the committee’s report, aggressive recovery actions by the Uganda Revenue Authority (URA) exacerbated Fresh Cuts’ financial distress. Measures like freezing bank accounts and confiscating essential equipment in 2015 reportedly halted operations, leading to the loss of valuable cargo.

However, some Members of Parliament questioned the appropriateness of the waiver. MP Gyaviira Ssebina argued that the relief would not address fundamental governance and decision-making issues that contributed to the company’s financial woes. He highlighted significant outstanding debts, including bank loans, unpaid salaries, and mortgage obligations, suggesting these liquidity challenges would persist.

Another proposal from MP Timothy Batuwa suggested a policy shift where government entities like the Uganda Development Bank (UDB) could take over struggling but strategically important companies like Fresh Cuts, converting debt into equity.

In a separate but related decision, Parliament also approved a Shs2.5 billion tax waiver for Innovations for Poverty Action (IPA). The committee found that IPA had met its obligations under a 2017 agreement with URA, but the tax body’s delayed action resulted in significant accumulated interest and penalties, impacting the non-profit’s funding and projects.

Source: https://www.parliament.go.ug/news/4594/parliament-approves-shs87-billion-fresh-cuts-tax-waiver