Deputy Speaker of Parliament, Thomas Tayebwa, has praised organizations excelling in financial reporting, highlighting its role in sustaining businesses and expanding the tax base.
Tayebwa delivered his remarks while officiating at the Financial Reporting (FiRe) Awards ceremony held at the Kampala Serena Hotel on November 1, 2023. He emphasized the importance of promoting ethical financial practices in the business community, as the economy heavily relies on a limited number of tax-compliant companies, which, in turn, results in a substantial national debt burden.
The FiRe Awards, an annual event jointly organized by the Institute of Certified Public Accountants of Uganda, the Capital Markets Authority, and the Uganda Securities Exchange, aim to recognize both public and private sector entities, as well as not-for-profit organizations, that excel in financial reporting.
Tayebwa underlined the significance of broadening the tax base and reducing the financial burdens on the business sector. He stated, “We know the burdens you do have; we have focused on a small group of companies that are disciplined to tax them heavily. If there is compliance in business, I am sure we shall expand our tax base and lighten the burden on you.”
Furthermore, he noted, “This will help us reduce borrowing. As a country, our gross domestic product [GDP] tax ratio is 13.8 percent, and our calculation is that if we can expand our GDP tax ratio to 19 percent, then we will be able to bring in extra Shs 10 trillion that will help us to focus more on critical items.”
Tayebwa also mentioned that the government is willing to provide tax incentives to companies that can demonstrate good financial ethics. He cited discussions with beverage companies seeking a reduction in excise duty, explaining, “Those in beverages say, ‘reduce our excise duty from 12 to 10 percent, and we shall be able to improve our sales by this margin, employ more people, and remit more tax revenue.’ But how does the government ensure that such achievements are met when the majority in the sector are not tax compliant?”
Expressing concern about the considerable portion of the national budget allocated to debt servicing, Tayebwa commended the FiRe Awards as a platform to encourage more businesses to join the tax base. He emphasized, “Out of a budget of around Shs 52 trillion, I do find that I have 18 trillion as discretionary budget, and the rest is on debt repayment. The only way we can get rid of this dilemma is ensuring we have discipline in clear financial reporting, which will widen the tax base, reducing the burden on businesses.”
Stephen Ineget, the chairperson of the FiRe Awards committee, explained that award winners are selected not only based on ethical financial reporting but also on how they incorporate good governance practices, environmental considerations, and social aspects, including gender equity. He clarified, “The environmental aspect deals with an organization’s impact on the planet, the social aspect deals with the impact an organization has on its people, and governance considers best practices that ensure transparency and accountability.”
FiRe Awards Criteria for Recognizing Excellence
|Ethical Financial Reporting||Adherence to ethical financial reporting standards|
|Good Governance Practices||Transparency, accountability, and best governance practices|
|Environmental Impact||Organization’s ecological footprint and environmental practices|
|Social Impact||The effect of the organization on its people and gender equity|