Government to Write Off Shs35 Billion in Tax Arrears as Part of Uganda’s Tea Industry Revival Plan

The government is set to write off more than Shs35 billion in tax arrears owed by tea factories as part of wider efforts to revive Uganda's struggling tea industry.

Deputy Speaker of Parliament Thomas Tayebwa announced the planned tax relief on Tuesday, September 8, saying the arrears would be waived when Parliament resumes from recess.

Tayebwa said the decision followed sustained efforts by Members of Parliament from Greater Bushenyi and other tea-growing areas who have been pushing for government intervention to address the 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.

He made the remarks while representing President Yoweri Museveni at the burial of the late Edna Kentaro Baryaruha in Bushenyi District.

The planned tax waiver is expected to ease pressure on tea factories that have accumulated significant debts and struggled to remain operational amid a prolonged crisis in the industry. Tayebwa said government was also working to address other challenges affecting the management and operations of tea factories.

He noted that accumulated tax obligations had become a major obstacle for some factories seeking to resume or sustain their operations.

“The other issues will also be streamlined to ensure that factories are run better,” he said.

Tayebwa further revealed that government was undertaking a broader review of the tea sector as part of efforts to secure its long-term sustainability. He said Shs212 billion had been earmarked for investment in the industry, although only factories that demonstrate efficient and effective management would qualify for the funding.

The intervention comes at a time when Uganda's tea industry has been grappling with falling prices, reduced international demand, rising production costs and financial difficulties among processors.

Tea prices declined sharply over the past year as weakened demand and increased volumes entering the market created an oversupply, pushing auction prices down. Political and economic disruptions in key importing markets, including Sudan, also affected demand for East African tea.

Uganda's heavy reliance on the Mombasa auction and its production of mainly CTC black tea have left the country particularly exposed to such market shocks.

The situation has been further worsened by rising fertiliser and other input costs, making it increasingly difficult for farmers to properly maintain their tea gardens. This has affected both the quality and quantity of green leaf supplied to factories.

With factories earning less from exports, their ability to meet operating costs and pay farmers has also been affected, creating a cycle of lower farmer payments, reduced investment in tea plantations and growing financial distress among processors.

In addition to the tea sector intervention, Tayebwa revealed that President Museveni had allocated land for the establishment of two industrial parks in the Ankole sub-region.

According to Tayebwa, five square miles of land have been allocated in Ruhengyere for an industrial park focusing on food processing, while another five square miles have been allocated in Nakivale, Isingiro District.

He also announced plans for an industrial hub in Kyeizoba, Bushenyi District, where the district has provided 70 acres of land for the project.

The announcements are expected to form part of broader efforts to boost industrialisation, create employment and stimulate economic activity in the Ankole sub-region.