Uganda Government to Waive Shs35 Billion in Tax Debt for Tea Factories

In a significant move to support Uganda’s struggling tea industry, the government is set to waive over Shs35 billion in tax arrears accumulated by tea factories. The announcement was made by Deputy Speaker of Parliament Thomas Tayebwa while representing President Yoweri Museveni at a burial in Bushenyi District.

Tayebwa indicated that the tax debt relief will be processed by Parliament upon its resumption from recess, following extensive lobbying efforts by Members of Parliament from tea-growing regions. This initiative is designed to ease the financial strain on factories, many of which have faced difficulties in remaining operational, impacting the ability to purchase green leaf from farmers.

The government’s plan extends beyond just debt forgiveness. Tayebwa assured that other operational challenges faced by the factories would also be addressed to improve overall management and efficiency. The tea industry in Uganda has been grappling with falling global prices, escalating production costs, and weakened demand in key export markets, exacerbated by political and economic instability in countries like Sudan.

With export earnings declining and input costs, such as fertilizer, rising, both factories and farmers are under immense pressure. The anticipated tax write-off is expected to provide much-needed financial breathing room for factories, enabling them to stabilize operations and improve their business prospects. This measure is part of a larger government plan to review and reform the tea sector for long-term sustainability.

Furthermore, the government intends to invest an additional Shs212 billion into the tea industry. However, this investment will come with conditions to ensure that funds are allocated to factories capable of effectively contributing to the sector’s recovery, reflecting a targeted approach to sector revival.

Source: https://www.monitor.ug/uganda/news/national/govt-to-write-off-shs35b-tea-factory-tax-arrears-5589854