Shs 30bn tax waiver for Fresh Cuts, New Plan: What does taxpayer get in return?

What the report says

Members of Parliament on Uganda’s Finance Committee are scrutinising a proposed Shs 30.4 billion relief package for distressed companies Fresh Cuts Uganda Limited, New Plan Uganda and state-owned Kilembe Mines Limited. The plan, discussed in Parliament in mid-August, includes Shs 27.78 billion in tax remissions for the two private firms and a Shs 2.6 billion write-off of unpaid mineral rents linked to Kilembe as it winds up operations.

According to the report presented to MPs, the government says Fresh Cuts and New Plan are unlikely to repay their debts in full, while Kilembe’s arrears remain on the books even though its exploration licences expired. Officials argue that clearing these obligations could help the firms rebuild their balance sheets, with the Uganda Development Corporation expected to support the companies after the relief is approved. The broader case from government is that a recoverable tax debt is worth little if a business is already unable to pay, but that future operations could generate jobs and new tax revenue.

Lawmakers, however, raised concerns about whether taxpayers would gain anything in return. MPs questioned the logic of rescuing firms with weak financial histories and asked for clearer evidence that the companies can be revived. They also pointed to accountability issues, including prior audit findings on tax waivers, revenue leakages and the need for stronger oversight before public revenue is forgiven.

The Finance Committee is expected to table its report to the full House soon. The debate fits a wider policy discussion in Uganda over when tax relief is justified, how to prevent abuse of incentives and whether public support should be tied to measurable economic benefits.