tax

New income tax amendment rejects government proposal to tax losses

By Alice Lubwama
Parliament has passed the income tax amendment bill rejecting government proposal to begin taxing companies that have been making losses for the past seven years.

The Uganda revenue authority had proposed an amendment in the Income Tax Act to introduce a tax penalty for a companies which report losses for a consecutive period of seven years of income on gross turnover for every year.

The state minister for finance in charge of planning David Bahati argued that the amendment would be critical at limiting revenue losses that occurs when a business that is making profit takes advantage of an assessed loss to avoid paying revenue for years.

Although majority of MPs on the Finance Committee Okayed the move to tax loss making companies, but budadiri west MP Nandala Mafabi rejected the move authoring a minority report and warned the Executive against creating an Act called Loss Tax Act.

The MP has also urged the Uganda revenue authority to intensify audits and investigations to discover those tax payers evading taxes but not charge a tax of 0.5%.

The chairperson of the Finance Committee of parliament Henry Musasizi said that they needed to amend the act since some companies were using an existing lacuna in the law to evade taxes.

“We have a list of the companies which belong to that category [of reporting losses]…they are suspected to be producing two sets of accounts, one for the management and another for the tax body,” he said.

But Butambala county mp Muhammad Kivumbi who successfully proposed the deletion of the proposed tax challenged the proposition that Uganda Revenue Authority (URA) lacks the basic competence to detect or avert such alleged false accounting.

“Last year, we enhanced the capacity of Uganda Revenue Authority by 90 billion shillings so that they can have the capacity to expand the tax base. Therefore, the argument that the Chair fronts does not stand,” Kivumbi said.

Even though the minister of state for planning Bahati tried to make MPs support his proposal saying that government will lose 40 billion they planned to raise from the measure and it is something that is done in other countries the MPs did not heed to his explanations and the bill was passed without the amendment.

Some of the companies that were meant to pay the tax loss include Barclays bank, NSSF, the micro finance support center, Munyonyo common wealth resort limited, hotel Africana among others

Comments

comments