Ugandan government's recent proposal to extend the income tax exemption for the Bujagali Hydro Power Project until June 30, 2025, has reignited debates among lawmakers and civil society organizations. ented by State Minister for Finance (General Duties), Hon. Henry Musasizi, on February 4, 2025, the Income Tax (Amendment) Bill, 2025, seeks a one-year extension of the tax waiver, aiming to prevent an increase in electricity tariffs for consumers.
Members of Parliament have expressed reservations about the continuous tax exemptions granted to Bujagali. In a previous session in 2023, Parliament rejected a government request for a five-year tax waiver extension, emphasizing the need for aprehensive audit of the project's financial dealings before considering further exemptions. Lawmakers have called for an expedited audit by the Auditor General to assess the financial status and obligations of Bujagi Energy Limited (BEL) before any additional tax waivers are approved.
Civil society organizations have also voiced strong opposition to the proposed tax exemption. They argue that despite previous tax waivers, electricity tariffs have remained high, making energy unaffordable or a significant position of Ugandans. These groups have called for a forensic audit into BEL's operations, highlighting concerns over the project's financial transparency and its impact on national revenue.
The government maintains that the tax exemption is crucial to prevent an escalation electricity tariff which could adverse affect businesses and consumers. The Ministry of Finance has indicated that tax is a component of the formula used to compute electricity tarif and maintaining the exemption is seen as a measure to keep energy costs stable as the Auditor General's report is awaited.
As the debate continues, the government has requested Parliament to expedite the bill's consideration, aiming for a resolution within two weeks. The outcome will significantly influence Uganda's energy sector, balancing the need for affordable electricity with fiscal responsibility and transparency.
The ongoing discussions underscore the complex interplay between fostering investment in critical infrastructure and ensuring accountability to the nation's taxpayers. Stakeholders across the spectrum are keenly observing how these issues will be navigated in the days ahead.
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