Finance Committee of parliament Chairperson, Henry Musasizi (pictured) recommends that the tax shouldn’t be levied on the gross turnover for companies declaring losses for seven consecutive years
Parliament has for the second time rejected the proposed corporation tax on Savings Credit and Cooperative Societies-SACCO’s. Government had proposed to levy a corporation tax on Profitable SACCO’s in the 2018/2019 financial year.
This is one of the proposals in Income Tax (Amendment) Bill, 2018. Government expected to raise Shs 10 billion from the corporation tax on SACCO’s. Corporation tax is a tax imposed on the net income of a company.
In its report, the Finance Committee of parliament recommended that government first conducts a study on the effect of exempting taxes on the SACCO’s before reintroducing the tax.
The Committee Chairperson, Henry Musasizi also recommended that the tax shouldn’t be levied on the gross turnover for companies declaring losses for seven consecutive years and that Uganda Revenue Authority (URA) should conduct an audit and establish the status of the company.
The Income Tax (Amendment) Bill, 2018 had sought to introduce a 0.5 percent a tax of on the gross turnover of a tax payer who carries forward tax losses for a consecutive period of seven years.
This proposed tax reform by government was intended to limit the abuse of the current policy, which allows tax payers to carry forward the tax loses.
According to Musasizi, under the principles of taxation, income tax is charged on income earned as opposed to losses made by a tax payer. He said that Clause 6, which proposes to tax companies that make losses, should be deleted.
Members of Parliament overwhelmingly supported the exemption of SACCO’s and companies declaring losses.
Bugabula South MP, Henry Maurice Kibalya said that government should focus on promoting savings and that the best way to do so is through exempting SACCO’s from taxes.
The Speaker of Parliament, Rebecca Kadaga also wondered why government was in a rush to tax SACCOs yet parliament made a decision to exempt them a year ago.