13 November 2012

Uganda: Bidco Fails to Impress MPs On Tax Holidays

Members of Parliament's committee on National Economy plan to put the government to task over the criteria followed in granting companies tax holidays. The 15 MPs, who were on a Uganda Revenue Authority-sponsored tour of several businesses in Masaka district, complained that many beneficiaries are not deserving.

"Some deserve the tax holidays, but many of them don't. There is no clear formula; it is just a matter of who gets to the big man first," Vincent Kyamadidi (Rwampara) told The Observer.

Kyamadidi and his colleagues had just been touring BIDCO's plant at Bwendero on Buggala islands in Kalangala. BIDCO, which has a running 25-year tax holiday, operates plantations on the islands.

URA could not say how many companies have concessions, but the tax body has taken MPs to 10 firms over the last two weeks, including Roofings Ltd, Steel and Tube Industries Ltd, Sameer Agriculture, Quality Chemicals Industries and Wagagai Florists, among others.

In Kalangala, the MPs initially had a warm reception from the BIDCO managing director, Kodey Rao, but things soon turned ugly as they asked him to explain how the company could have avoided cutting down a forest reserve to plant palm trees. Rao seemed unprepared for the scope of the MPs' questioning, as he had, perhaps, assumed that they would dwell on tax matters.

"How did you start these plantations without encroaching on forests?" team leader Kyamadidi asked.

"We didn't touch any forest land. At the time we came, we found virgin and idle land on which we established our plantations. The forest reserves are outside the plantations," Rao said.

Not convinced, the legislators pressed on. He further explained: "We employed independent surveyors whose survey report indicates that the plantations are outside the forest reserves," he answered.

"This man is not serious," Jacob Wangolo (Bunyole West) charged. "Even where signs are visible that a forest was cut, he denies it, as though he thinks we can't see for ourselves."

During the drive through the plantations, Rao had told the legislators, who were accompanied by the URA commissioner general, Allen Kagina, that the project had changed the lives of the over 1,800 farmers for the better.

But when Kagina picked on a woman during a stopover at Lusozi, where they met a group of outgrowers, the visitors were shocked. Veronica Nanyonga said the enterprise was no longer profitable owing to reduced rains.

"I would harvest about a ton from my 2.5 acres plantation, but now the yields have gone down so much that my best harvests currently measure about 400kg," Nanyonga said. "Rains would start around August but this is November, and we haven't started getting serious rains."

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