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CSOs urge government to audit Bujagali Dam tax incentives

| THE INDEPENDENT | Uganda government needs to carry out an audit to assess the impact of tax exemptions on Bujagali Hydropower Dam on the consumers prior to making any further extensions to minimise further revenue losses, according to civil society organisations.

The CSOs under their umbrella organisation ‘The Tax Justice Alliance Uganda’ said, it is unclear whether there has been any significant benefit to Ugandans through tariff controls.

The new appeal is in response to Henry Musasizi, the junior ministry of finance new proposal, to increase the period of Bujagali tax exemption to 2027. Yet according to the ministry of finance data, in 2018/2019 revenue foregone in Bujagali was Shs108 billion, 2019/2020, Shs100billion and in 2020/2021 was Shs90.7billion.

Henry Bazira, the executive director for Water Governance Institute, a member of the Tax Justice Alliance, said they agree with government strategy to offer tax exemptions to encourage local and foreign investment in the country, but faults it (government) for not producing a clear cost/benefit analysis of the exemptions granted so far.

He, however, said a new provision proposing to exempt the income of a hospital facility developer, whose investment capital is, for over a period of at least ten years from the date of commencement of business, at least US$5million dollars, is well intentioned.

CSOs, say they support the income tax bill amendment that allows research institutions, religious, charitable and educational institutions that are not for profit to be tax exempt as they immensely contribute to the country’s development.

However, they recommend that the individual tax rate (on gross rental income) be reduced to 10% from 12% and the company effective tax rate be made 12% instead of 15%.

URA bill

Under the URA Amendment Bill 2022, the finance ministry proposes that Parliament amends section 8 to empower the minister to amend the first and second schedules by statutory instrument to allow the minister to determine the operations of the URA Board such as the frequency of meetings and the quorum and change them at any time.

But CSOs say, this move limits the independency of the board and recommend that this amendment be dropped as the URA board ought to remain independent. The minister is also moving to lure Parliament to allow the URA board appoint officers at the level of assistant commissioner or higher and to provide for related matters. CSOs said, the position of manager is more a technical one than a managerial one in URA and therefore having the position in the hands of the institution instead of the board makes sense.

They also said, that the URA Act has no mention of a gender component in appointments and therefore, it should be included in the URA Act to ensure gender balance in appointments. The group presented their views before journalists on May 9 at SEATINI offices in Kampala.

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