Members of parliament on the Finance Committee have questioned the rationale behind a proposed Shs 30.4 billion tax and arrears relief package targeting two distressed private firms, Fresh Cuts Uganda Limited and New Plan Uganda, alongside the state-owned Kilembe Mines Limited.
The proposed relief has raised broader questions about the cost of rescuing troubled businesses, the legal thresholds for tax forgiveness, past accountability failures and, ultimately, what taxpayers stand to gain.
On August 13, State Minister for Planning Amos Lugoloobi asked parliament to approve Shs 27.78 billion in tax remissions – Shs 8.92 billion for Fresh Cuts and Shs 18.86 billion for New Plan.
A day earlier, the ministry of Energy sought a Shs 2.6 billion write-off of unpaid annual mineral rents owed by Kilembe Mines as the government-owned company winds up its operations.
The requests come against the backdrop of the Auditor General’s report on the Consolidated Financial Statements for the financial year 2024/25, submitted in January 2026.
The audit exposed systemic revenue leakages through tax reliefs and incentives, widespread non-compliance and irregularities in high-profile waivers, including those linked to Bujagali Energy.
It also highlighted the dominance of multinational companies among beneficiaries of discretionary tax relief despite representing a small fraction of registered taxpayers.
Previous value-for-money audits have quantified the cumulative cost of tax expenditures in trillions of shillings and questioned whether promised benefits such as jobs, local content and economic spillovers actually materialise.
What the law says
The main legal route for the private-company tax remissions is Section 43 of the Tax Procedures Code Act (Cap. 343).
Where the Commissioner General determines that a tax cannot be effectively recovered because of hardship, impossibility, undue difficulty or excessive recovery costs, the matter is referred to the minister. If satisfied, the minister may remit the tax in whole or in part, but only with Parliament’s approval.
The parliamentary requirement was strengthened to limit unilateral executive write-offs and improve accountability. For Kilembe, the request is based on Section 33(1) of the Public Finance Management Act, which requires parliamentary approval before government abandons or remits a claim or writes off a loss of public money.
The arrears arose under Section 189 of the Mining and Minerals Act, which requires holders of mineral rights to pay annual mineral rents. Although Kilembe’s exploration licences expired in 2022, the obligation remained. The Auditor General had already flagged the receivable and recommended that government consider writing it off.
Why the companies are seeking relief
The government says Fresh Cuts, a meat-processing company, had a negative net worth of Shs 22 billion as of 2022 and significant bank liabilities, including Shs 1.04 billion owed to dfcu bank and Shs 20.8 billion linked to IBM facilities.
The Uganda Revenue Authority (URA) issued demand notices and third-party agency notices but failed to recover the outstanding taxes.
New Plan, a consultancy involved in cultural heritage, archaeological management and geotechnical work, suffered a major cash-flow crisis after losing key contracts, including assignments with TotalEnergies EP Uganda and Trans-African Pipeline Consultancy.
By February 2025, the company owed dfcu Bank Shs 11.2 billion, resulting in the forced sale of assets at steep discounts.
Kilembe Mines, which is 99 per cent government-owned, has also failed to revive copper production since taking over operations from Tibet-Hima following the cancellation of its concession in 2017.
The proposed write-off is being presented as a step towards clearing the company’s books ahead of a new mineral production-sharing agreement signed in 2025 between a joint venture involving Sarrai Group Ltd, Nile Fibreboard Ltd and Uganda National Mining Company Ltd. Copper production is targeted for 2029.
What will taxpayers get?
Public details on the ownership structures of the two private companies remain limited in the parliamentary presentations.
Fresh Cuts’ financial distress has been attributed to chronic under-capitalisation, high leverage and persistent VAT arrears that continued to accumulate despite earlier requests for relief.
New Plan’s problems followed the termination of key oil, gas and infrastructure-related assignments, leaving the company unable to service its obligations. Its historical income-tax compliance has also come under scrutiny, with the company reportedly making only two income-tax payments between 2010 and 2025 despite working on projects such as Kabale Airport.
With Fresh Cuts carrying negative equity and substantial bank debt, URA says there is little recoverable value. New Plan has already had properties sold at what has been described as “giveaway prices”.
The proposed recovery strategy therefore rests largely on what happens after the tax relief.
Lugoloobi told MPs that the Uganda Development Corporation (UDC), the state’s industrial investment vehicle, will provide financial support once the companies’ tax obligations are resolved.
The expectation is that cleaned-up balance sheets will allow the businesses to resume operations, preserve or create jobs and eventually return to the tax net. But MPs were not convinced that a tax waiver automatically translates into a viable business or a public benefit.
“If New Plan is relieved of this tax obligation, do you think you can resuscitate yourself and get back into the same business?” asked Dicksons Kateshumbwa, Sheema Municipality MP. “Are you trying to preserve the company legacy? Your situation seems like it could take you into bankruptcy.”
Protazio Begumisa, Ndorwa County East MP, questioned New Plan’s sparse income-tax payment history and asked what concrete benefit government would receive from the proposed remission.
James Kakooza, the NRM Older Persons Representative for the Central Region, warned against allowing directors of distressed companies who may “control other profitable entities” to use Parliament as an escape route. He urged URA to “investigate thoroughly and hold individuals accountable.”
On Kilembe, Patrick Nsamba Oshabe, Kassanda County North MP, questioned the urgency of the write-off while the company’s winding-up process is still ongoing and Kilembe is not a party to the new mining agreement.
Other MPs demanded clarity on environmental risk mitigation, particularly given that floods have previously disrupted operations, as well as safeguards for workers.
The bigger tax-relief question
The concerns mirror long-standing Auditor General warnings that tax incentives can result in “deadweight loss”—where government forgoes revenue without generating sufficient additional economic activity.
Previous audits have also questioned whether beneficiaries meet employment and local-content commitments and warned that discretionary incentives can concentrate benefits among a narrow group of taxpayers.
Among the recommendations have been performance-based incentives tied to verifiable targets, mid-term reviews with automatic termination for non-compliance, cleaning up the inactive taxpayer register and shifting incentives towards sectors with stronger domestic economic spillovers.
The government’s case for the proposed relief is straightforward: taxes that cannot realistically be recovered generate little or no revenue, while a successfully revived company could generate future payroll taxes, VAT, corporate income tax and wider economic activity.
But that argument depends on whether the businesses can actually be revived—and whether government has sufficient safeguards to ensure that the public benefit outweighs the revenue being forgone.
The Finance Committee is preparing its report for the full House in the coming days. If approved, the proposed measures would clear roughly Shs 30.4 billion from the government’s books.