Parliament disagrees with Museveni on taxing loss making companies

Kampala, Uganda |  THE INDEPENDENT |  Parliament has rejected President Yoweri Museveni’s proposal to tax businesses declaring losses in the current financial year 2020/2021. This is now the fourth consecutive time that the government’s proposal is suffering defeat. 

The decision was taken during a debate on Tuesday, in which MPs reconsidered the Income Tax (Amendment) Bill which was returned by President Museveni on June 1. 

The President had asked parliament to reconsider that taxpayers, who declare liability for a consecutive period of five years of income less than 0.5 per cent of their gross turnover. He suggested that these should pay a minimum tax amounting to 0.5 per cent of the turnover for each year commencing with the sixth year.

According to the President, the measure, proposed in the Domestic Revenue Mobilization Strategy to generate revenue from taxpayers who have colossal turnover, was projected to raise additional revenue amounting to 178 billion Shillings. “Such a tax is not peculiar to Uganda as the United States of America, Tanzania, Kenya and Rwanda do employ it.” reads Museveni’s letter.

Finance Committee Chairperson Henry Musasizi had asked parliament to adopt the President’s position on the matter. He said that the move was meant to generate revenue from companies that are actually making profits but continuously register tax loses because of loopholes in the law.

Budadiri West MP Nathan Nandala Mafabi also said that the proposed tax will eliminate people from business and that it was not logical for the government to tax loss-making businesses.

Erute South MP Jonathan Odur questioned why the committee made a u-turn in regard to the taxes yet in its first report to parliament, the same had been rejected. He appealed to Parliament to reject the President’s proposals saying that they were going to cause an immediate collapse of businesses in the country.

Amos Lugoloobi, the Budget Committee Chairperson also appealed to fellow legislators to reject the proposals saying that they were very dangerous to the economy. He instead advised the government to enhance budget administration in the country.

Efforts by the State Minister for Planning David Bahati and Musasizi to convince MPs that the loss-making declaring companies were actually making profit yielded no fruit after legislators unanimously agreed to reject the government proposals.

Speaker Rebecca Kadaga then noted that she was going to return the Bill in its original form to the President.

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