Parliament has written off taxes meant to be paid by selected investors to the tune of over shs500 billion.
This was contained in the Tax Procedures Code (Amendment) Bill, 2019, whose object was “…to write off all unpaid taxes by government as at 30th June 2019.”
Finance State Minister, Hon David Bahati, in his defense of the move, said government had committed to pay the taxes on behalf of the companies, but got stuck because the money to pay the taxes was unavailable.
“A commitment has already been made, but we don’t have the money so the only thing is to write it off,” said Bahati.
The proposal attracted intense opposition yesterday, before Deputy Speaker Jacob Oulanyah deferred the matter to Wednesday, 08 May 2019.
Shadow Attorney General, Hon Wilfred Niwagaba questioned government’s intention to pay corporation tax for companies.
“How does government commit to pay corporation tax for individuals and you want us to write it off? How sure are we that these bonuses are not being shared elsewhere?” said Niwagaba.
Oulanyah tasked Minister Bahati to explain why “we are undertaking to pay income tax for people”.
Bahati defended the move, and added that the Shs500 billion only covers the period up to 31st March 2019.
“The commitment is up to the end of the financial year…there will be taxes to pay up to the end of June…this figure is total as at 31 March 2019,”said Bahati.
Clause 3 of the Bill, which was passed by Parliament, wrote off the taxes.
“(1) The Minister shall pay any tax due and payable by government, arising from a commitment made by government to pay tax on behalf of a person or owing from government as counterpart funding for aid funded projects,” partly read the Clause.
It continued: “(2) Notwithstanding subsection (1) above, all unpaid taxes by government as at 31 June, 2019 are written off”.
The list of beneficiaries is contained in schedule 4 of the Bill, which was considered and passed without amendments.
MP Muhammad Nsereko (IND, Kampala Central) faulted government for making those commitments without prior Parliament authorization.
“…these are things you should have brought to Parliament before you make those commitments because we [Parliament] appropriate,” said Nsereko.
Tax incentives and write offs for investors have attracted criticism in the past, with many saying such measures rarely extend to indigenous companies.
The enactment of this Bill marks the end of tax legislations that spell out sources of revenue for the next financial year.
It comes in time for the consideration and passing of the Appropriation Bill 2019, which is the instrument that actualizes the national budget.
Parliament has up to May 31st to pass the budget in line with the provisions of the Public Finance Management Act, right in time for the address on the state of the nation and reading of the budget by the President.