Parliament- Ministry of Finance officials yesterday admitted they abused billions of shillings in tax exemptions to selected private companies and organisations.
Ms Betty Kasimbazi, the ministry’s accounting officer said: We admit that we erred, this was a directive from the minister”.
Finance officials were appearing before the Public Accounts Committee (PAC) to answer audit queries for the Financial Year 2011/2012
Ms Kasimbazi apologised to the committee after she failed to explain why gross tax cash was used to settle tax obligations for a string of profit-companies in total disregard of the established procedures.
According to the Auditor General’s report, one of the companies, BIDCO Uganda Ltd, benefited from a VAT exemption for eight years and a tax holiday for 25 years where more than Shs540 billion was lost.
Mr Moses Kagwa, a commissioner at the ministry, told the committee that the decision was made by the minister who is the political head of the ministry.
The committee rejected this explanation and accused the ministry officials of “connivance”.
“What these people were doing is illegal, there is no way government can pay taxes on behalf of profit-making companies unless they are also shareholders,” PAC vice chairperson Paul Mwiru said.
Ministry officials tried to explain that the payments were a subsidy to the benefiting companies but this was dismissed as a diversionary tactic.
Ms Kasimbazi later tabled letters from former Finance Minister Syda Bbumba granting the payments to the companies. While Ms Bbumba was not available for comment, the committee said she will be summoned to tell her side of the story.