KAMPALA– The Members of Parliament are immovable on approving tax exemptions for some companies in Uganda Uganda, pending a report on its effectiveness.
The MPs instead have allowed a one-year tax exception to the Bujagali Hydropower project, but they will carry a forensic audit on the company’s alleged false accounting, which the legislators say has cost Ugandan taxpayers.
The company has been pushing for its tax exemptions to be extended to 2027.
A nine-member Adhoc committee headed by Sheema Municipality MP Dicksons Kateshumbwa will now first audit the company so as come up with appropriate recommendations on tax exemptions.
The other committee members are; MPs Paul Omara [IND, Otuke], Karim Masaba [IND, Mbale Industrial Division East], Nathan Nandala-Mafabi [FDC, Budadiri County West], Loy Katali [NUP, Jinja District Woman] and Herbert Tayebwa[NRM, Kashongi].
Also on the committee are; Faith Nakut [NRM, Napak District Woman], Esther Afoyochan [NRM, Zombo District Woman] and Muhammad Kivumbi [NUP, Butambala].
The decision to analyse the company’s financial books came yesterday as the MPs in a plenary considered the Income Tax Amendment Bill, 2022, which sought to revise the definition of “exempt organisation”, revise the tax rate applicable to individuals and companies for purposes of rental income, and provide for a ceiling on deductible expenses on rental income for non-individuals among others.
MP Nandala-Mafabi accused the other shareholders of the hydropower project of embezzling government of millions of US dollars, which he said is also responsible for the exorbitantly high power tariffs suffered by consumers compared to their regional neighbours.
“This has pushed up power which would have been less than five cents now; we need to give government six months to carry out the value for money audit of Bujagali to establish the true position of who has been benefitting from Bujagali,” Mafabi said.
MP Herbert Tayebwa castigated the company for what he said earning beyond its share capital. He supported the audit, expected to be concluded within three months.
“The return on equity on the share capital of Bujagali is 19 percent…return on equity is the net profit over the share capital; the financials indicate that Bujagali only brought in only US$10 million and therefore the return on equity would be US$1.9 million,” he said.
Tayebwa said the payouts, which are not based on the rate of equity on their shares, is responsible for the rather high electricity tariffs.
“We also found out that in computation of the tariff, they paid US$68 million to Bujagali which is 52 per cent of the composition of the tariff cost which in our thinking is too high; they should have actually paid them US$1.9 million which they are entitled to; because of that big payment, that is why the cost of tariff is so high,” he added.
Speaker of Parliament, Anita Among said it is unacceptable for government, who is the majority shareholder, to have no representation on the board that runs the power plant.
“We are the majority shareholders…we cannot continue not having membership on the board; we have to be represented on the board immediately; the dividends that are paid to the other shareholders should also be paid to us [Ugandans]…our contribution is US$20 million, theirs is US$10 million; we need dividends as Ugandans,” she said.
Meanwhile, on rental income, legislators passed Clause 3 of the bill, which in effect limited expenditures on rental income for taxpayers not being individuals forming allowable deductions to a maximum of 75 percent as provided in Section 22(1) (c) of the Income Tax Act, altering the current legal position, which allowed an unlimited deduction on expenditure.
MPs also amended the Third Schedule of the Act to provide a rate of 12 percent of rental income tax on all individuals making more than Shs 2.8 million from rent.
https://thecooperator.news/mps-minister-clash-over-proposal-to-extend-tax-holiday-for-power-company/
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