Uganda to write off US$9.3M tea factory tax arrears
The tax relief is part of a wider Ugx 212 billion (US$56.06M) government plan to address financial challenges, improve factory management and support Uganda’s tea industry.
UGANDA – Uganda is set to write off more than Ugx 35 billion (US$9.3M) in tax arrears owed by tea factories as part of government efforts to revive the country’s struggling tea industry.
Deputy Speaker of Parliament Thomas Tayebwa said the tax arrears would be waived when Parliament resumes after recess, following sustained efforts by MPs from Greater Bushenyi and other tea-growing areas to address challenges facing the sector.
“The minister directed that, when we resume Parliament, we will write off tax arrears worth more than Shs35 billion. I want to thank MPs from Greater Bushenyi who have worked hard on this issue,” Tayebwa said.
The planned relief is expected to ease financial pressure on tea factories that have accumulated debts and faced operational difficulties during a prolonged industry crisis. Tayebwa said government was also working to streamline issues affecting factory management and operations.
“The other issues will also be streamlined to ensure that factories are run better,” he said.
Tayebwa said accumulated tax obligations had become a major obstacle to the resumption of operations at some factories. He added that government was undertaking a broader review of the tea sector to support its long-term sustainability.
Uganda’s tea industry has faced pressure from falling prices, weaker international demand and large market supplies that have contributed to oversupply and lower auction prices. Political and economic disruptions in key importing markets, including Sudan, have further affected demand for East African tea.
The country mainly produces CTC black tea and relies heavily on the Mombasa auction, leaving producers exposed to regional and international market conditions.
Rising fertiliser and other input costs have added to the challenges, making it harder for farmers to maintain plantations and affecting the quality and quantity of green leaf supplied to factories. Lower export earnings have also squeezed factories’ ability to pay farmers and meet operating expenses.
Against this backdrop, Tayebwa said government has a larger investment plan for the tea sector worth Ugx 212 billion. However, he said only factories that demonstrate efficient and effective management will qualify for the funds.
The government’s planned interventions are aimed at addressing financial and operational challenges affecting tea factories while supporting wider efforts to restore the industry.
The tax arrears waiver is expected to form part of these measures, alongside the review of factory management and eligibility for new investment.
Tayebwa’s announcement follows calls from tea-growing communities and lawmakers for measures to address the financial difficulties facing factories and improve the sector’s sustainability and farmer incomes.
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