PAC Grills Finance Officials Over UGX 900M Tax Incentive to Hilton Hotel

2926 Views Kampala, Uganda

In short
However, Maxwel Akora, the lead counsel of the committee said the decision to review the policy on a case by case basis was unfair and a recipe for corruption.

Officials from the Ministry of Finance, Planning and Economic Development have come under fire from the Public Accounts Committee-PAC for alleged breach of the law and extending tax waivers to Aya Hotel amounting to 906million shillings. The officials appeared this morning before the committee to respond to queries in the auditor’s general report for the 2010/2011 financial year. During the year under review, the auditor general warned the ministry against giving tax waivers as incentives to hotels saying it was irregular.

He explained that tax incentives were only put in place on construction material for hotel meant to accommodate delegated during the Common Wealth Health Heads of Government Meeting-CHOGM. He said thatCHOGM ended in 2007/08 and the secretary to the treasury wrote to all accounting officer in December to terminate any further incentives. The auditor general however notes that the finance ministry went ahead to offer tax waivers and rebates to hotels in 2011 and in 2012 in violation of its own circular causing a loss of 906million shillings.
Betty Kasimbazi, the Under Secretary Ministry of Finance told the committee that the Secretary to Treasury wrote to Uganda Hotel Owners’ Association, communicating termination of the tax incentives to the Hotel Sector. Kasimbazi however says the ministry later reviewed the Policy on a case by case basis and extended the incentive to hotels that were still under construction. However, Maxwel Akora, the lead counsel of the committee said the decision to review the policy on a case by case basis was unfair and a recipe for corruption.

He demanded to know the hotels that benefited from the incentives and the reasons why they were selected.

//Cue in: “in your response………
Cue out:……….violation of your own circular”//
In response Kasimbazi said that only Aya Investments Limited benefited from the tax waivers because it was still under construction.
 //Cue in: “its true, the PS/ST wrote……….
Cue out:…….of 1.5billion during the twelve years”//
Maria Kiwanuka, the finance minister communicated to Managing Director of Aya Investments in a November 22, 2011 letter about the tax waiver on the construction material.
She explained that the hotel would benefit from the tax waiver until 30th June 2012.

Kiwanuka explains that the decision was taken because the hotel would create over 500 jobs for Ugandans within the first 5 years of its operations and generate corporate tax revenues for Government of Uganda of about 1.5billion during the first 12 years.  However, Kassiano Wadri, the committee chairperson wouldn’t have any of this.  He tasked the finance ministry to produce a policy document from the Executive giving the Minister Powers to extend the incentive.

//Cue in: “this incentive was purposely……….
Cue out:…….even after GHOGM”//
Moses Kaggwa, the Finance Ministry Commissioner tax policy noted that article 111 of the Constitution gives powers to the Executive to formulate policies and that the Policy was made. He explained that the minister acted with her powers to extend the incentive to Aya.

//Cue in: “under article 111 of the………..
Cue out:……..from a technical perspective”//


About the author

Olive Nakatudde
Olive Nakatudde is a URN journalist based in Kampala. Nakatudde has been a URN staff member since 2013.

Nakatudde started out in journalism in 2009 with Dembe FM radio in Kampala. In 2012, Nakatudde joined Voice of Africa as a political reporter. She has been a photographer since her journalism school days at Makerere University.

Nakatudde is interested in good governance and public policy, which she reports on intensively from the Uganda Parliament. She is a keen follower of cultural affairs in Buganda Kingdom and covers the kingdom's Lukiiko (parliament). Nakatudde also reports on education and health.