The President had asked parliament to reconsider a position 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.
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
a position that taxpayers,
who declare liability for a consecutive period of five years of income less
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
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.
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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.
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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.
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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.
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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.