Business and Finance

Government in U-turn over fuel tax rebates

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Government has repealed tax waivers on all oil fuel consignments going through the Tanzanian port of Dar-es-Salaam.

The tax rebate of Shs150 per litre to oil marketing companies that use the Tanzania route to import petroleum products to Uganda was suggested in 2011 by Cabinet as an incentive to check the over reliance of fuel through the pipeline from Kenya.

Speaking to the Daily Monitor last week, Mr Fred Omach, the State Minister of Finance (General Duties), said government had resolved that the waiver was not necessary.

Mr Omach noted that, a series of meetings with the relevant stakeholders (Uganda Revenue Authority, ministry of energy) had been convened, and they agreed that the tax was unlikely to check the fuel shortage; thus it was halted.
“As government, we have had a series of interventions to hold back the fuel crisis in the country, so we found that tax very unlikely,” Mr Omach said.

Past decision
The Cabinet decision (back then) came as a result of supply interruptions experienced due to the constrained infrastructure affecting the evacuation of petroleum products through the Kenyan pipelines and the need to promote security of supply of petroleum products to Uganda.

“It was an effort to incentivise importation through the Tanzanian route, although many (oil companies) still use the Kenyan one,” he added.
Uganda remains vulnerable to fuel shortages especially during elections in neighbouring Kenya-the major supply route, yet attempts to patch up the 30 million – litre fuel reservoirs in Jinja have persistently stagnated.

In the same regard, the URA reiterated that it could not allow the tax rebate to the oil companies because it was not supported by any statutory apparatus.

Mr Stephen Magera, the customs officer at URA, said whereas the motive of the tax waiver was conceivable, it was a suggestion by cabinet that was not stated anywhere in law and couldn’t be implemented.
“We are still waiting for a legal framework for that tax rebate, otherwise, we continue to charge oil companies the standard rates,” Mr Magera added.

He also added that because it was a ‘mere’ suggestion by cabinet that does not have an official policy, even oil companies had shied away from claiming their waivers.

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