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

The Parliament of Uganda has greenlit a significant tax waiver amounting to Shs8.7 billion for Fresh Cuts Uganda Limited, a company involved in meat exports. This decision, made during a plenary session chaired by Speaker Jacob Marksons Oboth, will alleviate the company’s tax debt.

The Committee on Finance, Planning and Economic Development had recommended the waiver, citing that Fresh Cuts met criteria for financial hardship and undue difficulty under the Tax Procedures Code Act. The committee’s report indicated that the company, employing 110 people and supporting numerous farmers, has accrued substantial arrears in salaries, Pay As You Earn (PAYE), and National Social Security Fund (NSSF) contributions.

According to the committee, Fresh Cuts faced severe financial distress, with liabilities vastly exceeding assets in 2022. Aggressive recovery efforts by the Uganda Revenue Authority (URA), including freezing bank accounts and confiscating equipment in 2015, reportedly crippled the company’s operations, leading to the loss of valuable cargo.

However, the approval was not without debate. Some Members of Parliament raised concerns about the justification for the waiver. Hon. Gyaviira Ssebina argued that the tax waiver doesn’t address the root causes of the company’s financial problems, suggesting that poor governance and inadequate due diligence by the owners contributed to the accumulated liabilities.

Other proposals included a policy shift for government entities like the Uganda Development Bank to potentially take over struggling strategic companies. Additionally, calls were made for a comprehensive tax expenditure report to better understand the impact of such waivers.

In a related decision, Parliament also approved a Shs2.518 billion tax waiver for Innovations for Poverty Action (IPA), a non-profit organization, due to delays by URA in processing its liability disclosure from 2017, which led to increased penalties and reduced donor funding.

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