Kampala: Parliament has approved a tax waiver for Fresh Cuts Uganda Limited, granting the meat-exporting company relief from Shs8.7 billion in tax arrears. This decision was made during a plenary session chaired by Speaker Jacob Marksons Oboth, despite objections from some members who questioned the company's eligibility for the waiver.
According to African Press Organization, conflicting views were presented by Members of Parliament regarding whether Fresh Cuts met the necessary conditions for a tax waiver under the Tax Procedures Code Act. The Committee on Finance, Planning and Economic Development had recommended the waiver after concluding that Fresh Cuts fulfilled the financial hardship, impossibility of recovery, and undue difficulty tests outlined in Section 43(1) of the Act.
The committee's report, presented by Hon. Max Ochai, noted that Fresh Cuts, which employs 110 people, provides a market for thousands of farmers. However, the company has accumulated significant salary, Pay As You Earn, and National Social Security Fund arrears. In 2022, Fresh Cuts' liabilities were reported at Shs28.66 billion, against assets of Shs8.49 billion. A shareholder wrote off a Shs20.82 billion loan in an effort to revive the company.
Ochai highlighted that the Uganda Revenue Authority's (URA) recovery measures exacerbated Fresh Cuts' financial challenges. The tax authority reportedly froze the company's bank accounts and confiscated computers and staff records in 2015, halting operations and leading to the loss of three containers auctioned at Mombasa Port.
Despite the committee's justification, Hon. Gyaviira Ssebina from Nyendo-Mukungwe Division objected, arguing that the waiver fails to address governance and decision-making shortcomings within the company. Ssebina noted that Fresh Cuts was acquired without proper due diligence, leading to its current financial burdens, including Shs2 billion in bank loans and unpaid salaries exceeding Shs1.5 billion.
Hon. Timothy Batuwa from Jinja South Division West proposed a policy reversal, suggesting that the government, through Uganda Development Bank, should take over such companies. He advocated for swapping debt with equity to maintain the company's strategic benefits for Uganda.
Kabula County MP, Hon. Enos Asiimwe, urged the government to present a tax expenditure report to Parliament, allowing an assessment of the impact of tax waivers and the continuation of such policies.
In another development, Parliament approved a Shs2.518 billion waiver for Innovations for Poverty Action (IPA), which had cleared its principal liability under a 2017 agreement with URA. The committee report on IPA criticized URA for its delayed recommendation of the waiver, which impacted donor funding and resulted in the loss of two United States-funded projects.
Source: African Press Organization