Museveni rejects Income Tax Bill for third time

Kampala. President Museveni has for the third time rejected the controversial Income Tax Amendment Bill that seeks to exempt MPs’ emoluments from taxes, citing anomalies in the proposed law.

Previously, Mr Museveni wrote to Speaker Rebecca Kadaga warning that MPs lack the “moral right” to exempt any of their emoluments from taxes and that doing so “would send a dangerous message” to other Ugandans who might also be tempted to join the bandwagon.

On both occasions, the President declined to assent to the Bill, saying the lawmakers were trying to escape taxes levied on their allowances.

However, on the third time, Mr Museveni, said he was under obligation to protect production sharing agreements.

The section provides that, “in case of a petroleum exploration license granted after December 31, 2015, the allowable deductions shall be subject to the limitations on deductions specified in the Production Sharing Agreement”.

But the President fears that taxing shares may undermine the exploration potential of the country’s oil reserves.

“According to the President, the understanding of both government and the existing licensees has been that there is a cap on allowable deductions for income tax purposes.

The cap is set at the cost recovery limits specified in respective production agreements,” Ms Kadaga told the House yesterday.

She was communicating the President’s position on the Bill.

The Speaker said this was included in the various field development plans submitted to government for approval and that the President had made proposals for Parliament to consider.

On November 15, Parliament passed the Income Tax (Amendment) Bill 2016 after the President had for the second time returned it to Parliament.

The Speaker said the Bill that had been returned by the President for reconsideration of Clause 21 that exempts income of MPs, except salary, had been fully debated by the House during its initial consideration.

However, President Museveni maintains the legislation needs further scrutiny, this time raising concerns with deductions on cost sharing which he said must not tamper with already existing undertakings.

“The President says restricting the cap on allowable deductions would be a change in the position accepted by both government and the licensees,” Kadaga told Parliament.

Daily Monitor could not access the President’s letter to the Speaker by press time.(NMG)