Uganda’s Finance Minister Henry Musasizi has clarified the conditions and procedure taxpayers must meet to have tax liabilities considered for remission under Section 43 of the Tax Procedures Code Act.

Appearing before Parliament, Musasizi said tax remission is not intended to provide general relief to taxpayers who are unable or unwilling to settle their obligations. Instead, it is reserved for exceptional circumstances where continued recovery of a tax liability would not be effective or would no longer serve the interests of sound tax administration.

Under the law, the Uganda Revenue Authority (URA) is expected to pursue available recovery measures before a case can be considered for remission.

These measures may include early engagement with the taxpayer, payment arrangements, enforcement action, recovery from non-essential assets, offsetting tax liabilities against available credits and, where appropriate, deferred payment or temporary suspension of recovery.

How taxpayers can apply for tax remission

Musasizi explained that the process begins with the taxpayer submitting an application to the URA Commissioner General.

The application must provide details of the outstanding tax liability and explain why remission is being requested. Taxpayers are also expected to submit supporting evidence, which may include financial records, information on assets, insolvency documentation and other material demonstrating their circumstances.

The Commissioner General then assesses the application.

Where URA is satisfied that the liability cannot be effectively recovered because of circumstances recognised under the law, the Commissioner General may refer the matter to the Minister responsible for Finance.

The Minister subsequently reviews the case and, where satisfied, submits the proposed remission to Parliament for consideration.

Parliament has the final say on whether the liability should be remitted in whole or in part.

Once approved, the remission is gazetted and URA proceeds with implementation.

What qualifies for tax remission?

According to Musasizi, taxpayers may be considered for remission where there is genuine financial hardship, impossibility of recovery, undue difficulty or an excessive cost associated with recovering the tax debt.

Financial hardship must be genuine and demonstrable. The Minister said continued recovery should, in such circumstances, create serious distress that is disproportionate to the revenue the government is likely to collect.

The requirement is therefore not simply that a taxpayer is struggling financially.

What does not qualify as hardship?

Musasizi drew a distinction between genuine hardship and ordinary business or financial difficulties.

He said temporary cash-flow problems do not, on their own, justify tax remission.

Other circumstances that do not qualify include reduced profitability, commercial inconvenience, a taxpayer's decision to prioritise funds for business expansion or investment, dissatisfaction with a tax assessment, or an unwillingness to pay.

This means taxpayers cannot seek remission simply because paying their tax obligations would affect their business plans or reduce available funds for other purposes.

Remission is not a blanket tax waiver

Musasizi described Section 43 remission as an instrument of revenue administration rather than an avenue for routinely cancelling tax debts.

The provision is intended to be applied objectively and transparently in cases where lawful recovery measures have not been effective and exceptional circumstances make continued recovery inappropriate.

For taxpayers, the clarification means that an application alone does not guarantee relief. Applicants must demonstrate why recovery cannot reasonably be achieved and provide evidence supporting their claim.

Ultimately, the decision rests with Parliament after consideration of the case presented by the Finance Minister.