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Businesses turn to loans to pay taxes
(Left-right) Mr David Ndugwa of Innovations Village, Mr Richard Niwenyesiga of Uganda Investments Authority, Mr Jude Kansiime of dfcu Bank, Dr Fred Muhumuza, who presented the survey findings, outgoing Nation Media Group Uganda managing director Tonny Glencross, Mr Peter Kyambadde of KPMG, and Mr Peter Kwagala of Uganda Securities Exchnage at the Sheraton Hotel in Kampala yesterday. These represented companies that sponsor the Top 100 Mid-Sized Company survey. PHOTO/STEPHEN OTAGE
What you need to know:
While presenting the 2023 survey results yesterday, Mr Peter Kyambadde, a partner with KPMG, an audit firm, said unlike the previous years where the companies had complained of financing, this year, the survey results are unique because the challenges that the entities are facing include taxes, policies and administration
Results from the 2023 Top 100 Mid-Sized Company survey indicate that more than 40 percent of the companies still surviving in business are now depending on bank loans to clear their tax obligations.
While presenting the 2023 survey results yesterday, Mr Peter Kyambadde, a partner with KPMG, an audit firm, said unlike the previous years where the companies had complained of financing, this year, the survey results are unique because the challenges that the entities are facing include taxes, policies and administration.
“This year, entities are facing high taxation and the message they are bringing is that the tax is having an impact on them. They are finding problems with tax, they have cash flow issues and yet they have to account for VAT within 15 days. When they borrow, the interest rates are high, the working capital is dwindling, and a number of businesses are closing,” he said.
He added that although these are old taxes, more than 40 percent of the businesses surveyed complained about the high taxes, which are impacting them because most of the goods they supply are taken on credit and their customers take long.
Dr Fred Muhumuza, an economist and a lecturer at Makerere University, who presented the findings at Sheraton Hotel yesterday, said the 2023 Top 100 Mid-Sized Company survey results produced interesting information for policy makers and business leaders to consider.
He added that since these are companies that have survived for more than three years, through Covid-19 disruptions and they still have a positive future outlook, it is important for government to pick lessons from them to understand what has made them survive the tough times.
“No one should forget that these are companies which have survived their third birthday and above and they offer lessons of what you need to do for the business to survive. It is important for you to understand what kind of business you want to do and also recognise the competition as a threat,” he said.
He observed that many foreign companies are partnering with Ugandan companies, a lot of them facing challenges with taxes, and that some of the policies inhibit them from borrowing from cheaper sources such as the securities exchange because of poor governance structures that do not allow them to list in the Stock Markets.
He added that some of the companies have outsourced and adopted technology such as apps for cash collections which have enhanced quick decision and agility while others have taken on innovative approaches such as artificial intelligence to enhance company growth and reduce staffing.
Now in its 15th year, the annual survey is an initiative between KPMG and the Nation Media Group to identify the fastest-growing medium-sized companies in Uganda.
Today, this year’s winners will be unveiled during a gala night dinner to be hosted at Hotel Africana
