Published on 31/10/2025
Ministry of Finance has asked Parliament to approve a waiver of UGX 1.3 billion in Value Added Tax (VAT) owed by the Uganda Cooperative Alliance (UCA), citing financial distress following the fraudulent sale of the organization’s prime properties.
The request was tabled before Parliament on 29 October 2025 by the Minister of State for Finance (General Duties), Henry Musasizi, in line with Section 43(1) of the Tax Procedures Code Act, Cap 343, which empowers the Minister of Finance to waive taxes, subject to parliamentary approval.
“Section 43(2) of the Tax Procedures Code Act provides that where a taxpayer’s case is referred to the Minister by URA and the Minister is satisfied that the tax due cannot be effectively recovered, the Minister shall, with Parliament’s approval, remit in whole or in part the tax due,” Musasizi told MPs.
The Ministry’s proposal is supported by a July 18, 2025 letter from John Musinguzi, Commissioner General of the Uganda Revenue Authority (URA), recommending a waiver of the VAT arrears.
According to the URA, as of 16 July 2025, UCA’s tax obligation stood at UGX 1,313,376,467, comprising UGX 672,527,403 in principal VAT and UGX 640,849,064 in accumulated interest. “In light of our earlier communication, we recommend a waiver of Uganda Cooperative Alliance’s VAT arrears amounting to UGX 1,313,376,467 in accordance with Section 43(1) and (2) of the Tax Procedures Code Act, on grounds of financial hardship,” Musinguzi noted.
URA attributed UCA’s financial woes to a sharp drop in revenue from rental income and member subscriptions, from UGX 1.81 billion in 2021 to UGX 1.26 billion in 2023, representing a 31% decline. The revenue fall, URA added, followed the fraudulent sale of UCA’s prime properties by former management.
The cooperative body’s short-term loans also spiked from UGX 48 million in 2021 to UGX 405 million in 2023, while its long-term debt declined from UGX 1.55 billion to UGX 1.12 billion, mainly due to outstanding loans from Housing Finance Bank.
This is not the first time the Government has sought tax relief for distressed entities. In March 2025, Parliament approved a UGX 9.6 billion tax waiver for eight private institutions, including Nkumba University, J2E Investment Corporation Ltd, Nicontra Ltd, Busoga University and Makerere Business Institute Ltd.
Others that benefited were Kisiizi Hospital Power Ltd and Peter Lokwang, while Parliament rejected a UGX 2.6 million waiver for businessman Donati Kananura, ruling that his claim of ill health was not convincing.
The latest request comes amid concerns over Uganda’s rising tax expenditure. The August 2024 Tax Expenditure Report by the Ministry of Finance revealed that the country has foregone over UGX 12 trillion in taxes over the past five years, with UGX 2.97 trillion lost in FY2022/23 alone.
The report also showed that tax expenditures have grown from UGX 2.08 trillion in FY2019/20 to UGX 2.97 trillion in FY2022/23, marking an increase of UGX 893 billion in just five years. The Ministry admitted that the true figure could be even higher due to incomplete data capture.
Deputy Speaker Thomas Tayebwa referred the Finance Ministry’s proposal to Parliament’s Committee on Finance for scrutiny. The Committee will review the submission and present its findings before a final decision is made on whether to approve or reject the waiver.
