Inside the deal that got red flags flying
What you need to know:
- Mr Ramathan Ggoobi, the Secretary to the Treasury; UVCC company secretary, Moses Matovu; and Ms Enrica Pinetti, UVCC’s board chairperson, witnessed the signing.
The deal with Uganda Vinci Coffee Company Limited (UVCC) was signed on February 10.
Finance minister Matia Kasaija signed on behalf of the Government of Uganda.
Mr Ramathan Ggoobi, the Secretary to the Treasury; UVCC company secretary, Moses Matovu; and Ms Enrica Pinetti, UVCC’s board chairperson, witnessed the signing.
The agreement expressly states in clause 4.1 that UVCC “shall be entitled to all tax exemptions available under the laws of Uganda. [These] shall extend to taxes and impositions applicable to all the activities of the company and its foreign staff in respect to the export of green coffee beans.”
UVCC’s concession, which runs its course in 2032, is subject to renewal. During that period, the deal allows it to enjoy a raft of tax holidays, including Import Duty, Value Added Tax, Excise Duty, Stamp Duty, Corporate Income Tax and employment-related taxes.
Clause 4.2.1 of the deal states that “where no exemption from tax is allowed under the law of Uganda or exemption provided is inadequate to provide the company with comprehensive relief, from taxes or other impositions, then the government undertakes that it will bear the cost of all taxes.”
Clause 4.1.4 of the deed states thus: “If there is any change in law or change in tax which substantially alters the economic benefits accruing, the company may within one year from commencement of the deed (February 10) write to government in order to maintain the economic benefits of UVCC.
“Upon receipt of the notification, government shall take immediate steps to restore the company to economic position it should have been in but for the change of law.”
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Another clause that has turned out to be a sticking point is 4.2.1 where the government commits to ensure reasonable measures to give priority of supply of coffee to UVCC before registering any contract or acknowledging any arrangements for export of coffee beans so that the company (UVCC) will have ample supply of coffee to sustain its operations.
Clause 3.1 of the agreement states that UVCC will roast coffee beans, manufacture coffee capsules, as well as grind and make instant spray coffee.
Taken together, the company will produce 60,000 tonnes of processed coffee. It will also create 246 jobs for both skilled and unskilled labourers.
Last month, Saturday Monitor exclusively revealed the owners of UVCC. We revealed that UVCC—which registered on January 9, 2014—is owned by four individuals and one firm (Hawk Limited). All owners have registered addresses in the United Arab Emirates (UAE), a flourishing tax haven.
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The individual owners include Ahmed Ahmed Sultan Ismail and Hisham Ahmed Sultan Ismail, both of whom have equal shares of 10 and are registered on address P.O.Box 118508, Dubai UAE. Their Abu Dhabi-based colleagues—Ibrahim Elias Salloum and Hadi Elias Salloum of P.O.Box. 46527—also have an equal share holding of 10. Hawk Limited—with 960 shares to its name—is registered on P.O.Box 58562, Dubai, UAE.