Uganda approves $9 million tax waiver to assist struggling tea industry

The Ugandan parliament has agreed to waive $9.26 million in tax arrears owed by tea factories as part of efforts to reduce the financial burden on the country’s tea industry.

The deputy speaker of the parliament, Thomas Tayebwa, confirmed the government’s intention during an event on Tuesday, and the lawmakers subsequently announced it would approve the tax relief once lawmakers resume.

The government is set to write off more than Shs35 billion in tax arrears owed by tea factories as part of a wider intervention to revive Uganda’s struggling tea industry, according to a statement on Wednesday.

It added, “He (the deputy speaker) said the arrears will be waived as soon as Parliament resumes after recess. The decision follows sustained efforts by members of parliament from Greater Bushenyi and other tea-growing areas to address challenges facing the sector.”

The decision to grant the tax waiver came as tea factories continued to struggle with accumulated debts and operational challenges after tea prices fell sharply in the past year due to a decline in international demand.

The parliament also pointed out that the tea market has become oversaturated, creating an oversupply that pushed auction prices down.

“Political and economic disruptions in key importing countries, including Sudan, further reduced demand for East African tea.

“Uganda, which relies heavily on the Mombasa auction and mainly produces CTC black tea, was particularly exposed to these market shocks,” the parliament stated.