Parliament Approves Shs18.8 Billion Tax Relief for Newplan

Parliament has officially endorsed an Shs18.8 billion tax waiver for Newplan Limited, a local firm operating in Uganda’s oil and gas sector. The decision, made during a Wednesday sitting chaired by Speaker Jacob Marksons Oboth, acknowledges the company’s vital role in a sector crucial for the nation’s economic future.

The Finance, Planning, and Economic Development Committee, in its report presented by Hon. Max Ochai, highlighted Newplan’s significant contributions to the petroleum industry. The committee noted that Newplan was awarded contracts for the East African Crude Oil Pipeline (EACOP) by Total Energies in 2018, employing over 700 staff and consultants at its peak.

However, the suspension of EACOP activities led to Newplan losing four major contracts, severely impacting its financial standing. The company had secured an Shs11.2 billion loan from DFCU Bank for these projects, leaving it with substantial tax arrears in PAYE, VAT, and withholding tax.

Lawmakers emphasized that supporting Newplan is essential for safeguarding Ugandan involvement in an industry predominantly managed by foreign entities. “The oil and gas sector is one where Parliament pushed government to come up with local content rules to enable Ugandans to participate,” stated Sheema Municipality MP, Hon. Dicksons Kateshumbwa.

Minister of State for Industry, Hon. David Bahati, described Newplan as a pioneering Ugandan company in the competitive petroleum landscape, suggesting the waiver would allow it to restart operations and further benefit local employment. While some MPs raised concerns about setting a precedent for tax waivers and the company’s auditing practices, the majority supported the motion, viewing it as a necessary measure to revive a strategically important local business.

Source: https://www.parliament.go.ug/news/4599/newplan-gets-shs18-billion-tax-relief