Fresh Cuts deals in meat processing in Uganda/ Fresh Cuts photoBy Prisca WanyenyaParliament has granted Fresh Cuts Uganda Limited a tax waiver worth Shs8.73 billion amid protests from Opposition MPs who revealed the company has a negative net worth of Shs22.61 billion since 2022.The approval followed tabling of a report by Finance Committee Chairperson Maximus Ochai during the August 1, 2026 plenary, recommending the waiver on grounds that Uganda Revenue Authority (URA) had indicated it was impossible to recover the taxes.“Due to Fresh Cuts Uganda Limited’s financial hardships, impossibility for URA to recover the tax arrears and undue difficulty in recovering the arrears; the Committee recommends that Parliament approves the waiver amounting to Shs8,732,107,807 in accordance with Section 43 of the Tax Procedures Code Act,” Ochai said.Documents before Parliament show Fresh Cuts applied for a waiver of Shs8.92 billion covering Value Added Tax, Withholding Tax, Income Tax and Pay As You Earn (PAYE). Of this, principal tax was Shs5.13 billion, penalty Shs25.2 million and interest Shs3.76 billion.However, the Committee observed the actual amount eligible for waiver is Shs8.73 billion as opposed to Shs8.92 billion applied for. The liability has since grown.“The tax liability has increased by Shs531 million to Shs9.45 billion as at August 4, 2026, including penalty and interest. As at June 30, 2016, Fresh Cuts had outstanding VAT of Shs192.6 million. However, following enactment of Section 47C of the Tax Procedures Code Act, the VAT liability outstanding as at June 30, 2016 was automatically waived,” Ochai explained.Parliament was informed Fresh Cuts’ woes date back to 2014 when ownership changed from Belgian nationals to Ugandan nationals: James Kisembo Aheebwa (10%), Amos Tindyebwa (75%) and Lydia Arinaitwe (15%), but due diligence at the time failed to flag historical tax arrears.MP Gyaviira Lubowa Ssebina (Nyendo-Mukungwe) in a minority report authored with Paul Mwiru (Jinja South East) wrote, “This is an indication that the current owners engaged unprofessional and unqualified assessors. It would be unfair to commit public resources to benefit a company whose proprietors failed to undertake sufficient due diligence.”The minority report warned granting waiver arising from PAYE and Withholding Tax is erroneous because the company is only a collection agent.“In the strict sense, it is not tax paid by Fresh Cuts Ltd rather it is tax paid by an employee and service provider. The waiver is not the appropriate remedy. The woes emanate not from market volatility, they emanate from governance and decision-making shortfalls,” Gyaviira argued.The Opposition hinged their objection on the negative net worth of Shs22.61 billion as of 2022, and that latest audited accounts were not furnished to determine current financial health.“Please note the tax waiver is Shs8.9 billion. Even if granted, it would not address the financial woes. Actually, the Minister informed the Committee the company has inadequate working capital. Shareholders had provided Shs22.04 billion in 2020 and Shs20.81 billion in 2021. Had the company desired to clear tax obligation, it would have done so,” Gyaviira noted.The report also revealed Fresh Cuts told the Committee it has Shs2 billion in bank loans and over Shs1.5 billion in unpaid salary arrears. However, its Annual Return to URSB indicated mortgage obligations of Shs4.016 billion and $520,767 to dfcu Bank.“This affirms that the company has liquidity challenges for which tax waiver is not the most appropriate remedy,” the minority report said.The Opposition asked Parliament to defer the waiver and consider equity financing through Uganda Development Corporation (UDC) instead.Samuel Kungu (Kigulu North) rejected the waiver, noting no effort to pay principal and questioning financials.“Analysis of audited accounts as at 2021 and 2022 indicated an increase in current assets and non-current assets. When we see a taxpayer in persistent loss, that is an indicator of compliance issues. We don’t just close an eye and say taxpayer is in a loss so we give him a waiver,” Kungu said.“It means there are transfer pricing issues, because as a businessman, you cannot keep investing in a loss-making company,” he added.Kungu also questioned waiving withholding tax and PAYE deducted from suppliers and employees, warning Parliament would open “a can of worms.”Julius Nakiyi (Budadiri East) proposed waiving interest and penalty but requiring payment of principal over five years with a two-year grace period to ease cash flow.Tom Aliti (Maracha East) supported the waiver, citing technicalities to promote meat processing and beef exports.“They have experienced severe liquidity issues. The committee did eligibility criteria on financial hardship, impossibility test, undue difficulty test, and found them with a lot of debts and liquidity challenges,” Aliti said.Timothy Batuwa (Jinja South West) acknowledged the firm’s strategic role in exporting animal products but argued a waiver will not help and proposed debt-to-equity swap with UDC becoming majority shareholder.Minister of Finance Henry Musasizi asked MPs to consider whether granting waiver would enable recovery.“My answer is no; we shall not have done something wrong. We shall have done something right. Initially things were going well, but because of failure by Fresh Cuts to detect inherent problem from original company, where it was not able to pay taxes carried by the new company, is where things became difficult. Should we criminalise the company for things which happened before it took management?” Musasizi said.He said both URA and Ministry were satisfied from an economic view the company can be recovered.“Our focus is forward. If we waive this tax and the loan is offset, this company can do business again, create jobs, promote exports, and pay taxes going forward. Do we kill Fresh Cuts with all its contribution and potential? Or we salvage this company?” he asked.When Speaker Jacob Obooth put the motion to a vote, majority of MPs responded “Ayes”, approving the waiver.The post Parliament Grants Shs8.7Bn Tax Waiver to Distressed Fresh Cuts Amid Protests appeared first on Business Focus.