A number of SACCOs under their collective body, Uganda Cooperatives Savings and Credit Union Ltd, have petitioned the Parliamentary Finance Committee opposing the reinstating of taxes on SACCOs barely a year since a motion for their exemption was passed.
In the new proposed taxes presented by government on Tuesday, a tax of 30% was slapped on SACCOs despite a ten year grace period that they were given as exempted, effective last year to give them room to grow.
In their petition, the Union highlights a number of taxes SACCOs pay including Pay as you earn from employees of the SACCO, local service tax, income tax, withholding tax, operation tax among others.
The union hence disagrees with the proposed tax saying it discourages the public from saving their money and that it affects the growth of cooperatives.
Kyaka Twaha, the business development manager of the union and the chairperson of Kayunga – Mukono Teachers’ SACCO Nabuyungo Mary Josephine were some of those who presented the petition.
“If the exemption of SAACOs from tax is upheld, it will continue to motivate members of the public to save with SACCOs and generally the financial system will be boosted as they will be raising more revenue,” Kyaka said.
Kyaka added, “In SACCOS, there is no capital flight and repatriation of profits as it is the case with foreign controlled financial institutions and other entities which are granted tax holidays.”
The State Minister for Finance in charge of planning, David Bahati on Tuesday justified the proposed tax on SACCOs saying they have identified SACCOs that have accumulated wealth mentioning the Kwagalana SACCO and that such cannot just be left to operate without remitting taxes.
The Director Wazalendo SACCO, David Semakula noted that it’s unfair to subject SACCOs of the poor Ugandans to such a tax. He cited soldiers as some of those who earn meagre income but save with Wazalendo in a bid to cooperatively grow.
The Chairperson Uganda Parliamentary SACCO Jalia Bintu challenged the Ministry of Finance to come up with remedies for SACCOs of wealthy people other than suppressing the entire SACCO sector of which majority of its members are poor people who are struggling to save and see how they can grow.