Bujagali Secures Another Year Of Tax Waiver Despite Auditor-General’s Warning

Posted by: lukwago J in Uganda news May 8, 2024

In a recent development, Parliament has passed the Income Tax Amendment Bill, 2024, granting Bujagali Energy Limited an additional year of tax waiver. This decision has been made despite the Auditor-General, John Muwanga, sounding the alarm about the significant loss of Shs1.417 trillion in tax exemptions that Uganda suffered in the fiscal year 2022/23.

In his December 2023 audit report, Muwanga emphasized that Uganda’s foregone taxes resulting from tax waivers amounted to a staggering Shs1.417 trillion.

Of this amount, Parliament accounted for Shs1.293 trillion in tax waivers, making it the leading body in dispensing such exemptions.

Additionally, the Ministry of Finance waived taxes totaling Shs118.5 billion, while the Commissioner General of Uganda Revenue Authority, John Musinguzi, exempted taxes amounting to Shs5.6 billion.

Interestingly, despite Parliament initially rejecting Bujagali’s request for a five-year tax waiver extension in March 2023, they have continued to extend the waiver for one year at a time. This latest approval signifies that the company has now obtained three years off their initial request.

It is worth noting that even Parliament’s own report revealed that Bujagali owes Ugandans a hefty sum of $342,198,189 (equivalent to Shs1.3 trillion) due to excess power tariffs they charged through dubious tariff computation methods.

The Opposition has strongly cautioned against extending Bujagali’s tax waiver, even for a week, as they highlight that Uganda has already foregone revenue worth Shs388.70 billion between 2018 and 2021 due to tax exemptions.

Pakwach District Woman MP Jane Avur rejected the notion

This lost revenue could have been utilized to construct 353 health center IVs at a cost of Shs1.1 billion each, 2,950 secondary school classroom blocks at Shs131.75 million each, and 3,070 primary school classroom blocks at Shs126.60 million each as of 2022.

In response to the government’s argument that the Auditor-General’s forensic audit into Bujagali had been delayed, Pakwach District Woman MP Jane Avur rejected the notion and stressed the need to establish a time-frame within which the Auditor-General should report back.

She expressed concerns that the public perceives these extensions as mere games, with no concrete evidence to support claims of potential tariff increases.

Butambala County MP, Muwanga Kivumbi, also expressed his dissatisfaction and called for an end to the extensions, stating that it is time to leverage the power generated from the dams already constructed in the country.

He emphasized that Bujagali’s continuous extensions are a disregard for parliamentary processes and a sign of impunity.

However, Henry Musasizi, the State Minister for Finance, who initially submitted Bujagali’s request through a separate letter rather than including it in the tax bills, requested an extension of the waiver for one year. He assured the MPs that the anticipated audit would be completed within six months.

The debate surrounding Bujagali’s tax waiver continues to unfold, with concerns over lost revenue, accountability, and the impact on the country’s power tariffs.

As the discussions persist, it remains crucial to weigh the long-term benefits against the short-term exemptions granted to Bujagali Energy Limited.

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