Turn off? Grace Foam bosses in the tax scandal SH17 billion.

New controversy has broken out through Uganda's industrialization policy after it turned out that the government by the Ministry of Finance has committed import taxes for a company in Chinese, which is undertaking under Tangshan Mbale Industrial Park, at a time at a time, in which other difficulties remain without support with zero.

The company on site is Grace Textile International Investment LTD, generally known as Grace Foam, which deals with foam and bedings (mattresses, blankets and bed linen).

After the documents of this publication, the Ministry of Finance wrote to Uganda Revenue Authority (Ura) on September 20, 2023, in which TPD167/238/09 was referred to and committed to paying taxes for the imported “intermediate structure input of the company” by June 30, 2024.

A subsequent Ura demand notification of September 4, 2024, signed by AG. The Commissioner, Asadu Ksitu, shows that Grace Foam has collected over 17 billion UGX at unpaid taxes between July 1 and September 4, 2024, two months after the government's obligation.

While the ministry had undertaken to fulfill these obligations with money from the National Ministry of Finance, what remains unclear and of considerable public interest as to whether this money was actually paid to Ura or whether it is still an obligation of paper.

Studies about whether actual payments were valid.

Industry experts and import surveillance sources claim that the company imports finished products from abroad, whereby branding and even “in Uganda” have already printed labels described in Uganda and only contains minimal to no added value on Ugandian soil.

“This cannot be referred to as production,” an industry player told us on the condition of anonymity. “When the products come in brand, packaging and preparations for the market, what is being manufactured here? What does this qualify for the government's tax support?”

In contrast, a processing company that works in the same industry continues to meet all tax obligations without government support.

According to reports, this company reports over 1000 Ugander and contributes an average of 2 billion UGX per month of taxes, a total of 24 billion CV per year.

In the meantime, Grace Foam is said to employ fewer than 200 employees, but was selected for tax payments as part of a special agreement that was not extended to other players in this sector.

The matter was first brought to light in a letter dated March 4, 2024, written by Kampala Associated Advocates (KAA) and addressed to the constant secretary of the Ministry of Finance, in which legal concerns about the type of agreement were expressed.

The letter questioned the legal framework, the Hon. The Matia Kasaija Ministry, to take over the tax obligations of a private company and requested the clarity about the criteria for the selection of Grace Foam for such advantages.

Just as the Kaa letter of Kasaija's Ministry of Mistory, he triggered a widespread debate in both economic and legal circles.

Citizens and manufacturers now ask why this advantage was only achieved for Grace Foam, whether a measurable value was delivered in return, how much money was previously paid by the Ministry of Finance, which was signed, if at all, between the government and the investor, and above all whether the investor has made its promise.

For observers, it is even more frustrating that the same tax obligation was suspended in September 2022 until a more comprehensive consultation of the interest groups was suspended, but was later reinstated in 2023 without public explanations or engagements, with questions about transparency and accountability in the decision -making process.

The correspondence of the internal ministry shows various civil servants who forward the letter via desks, with comments on uncertainty and the need for guidelines, a sign that even within the government, the matter was not fully clarified.

While the tax obligation appears officially and the unpaid tax question from URA confirms the continued imports of the company, no clear evidence has yet been found that Ura has received actual payments from the Ministry of Finance.

This is now an important topic that is checked by investigative stakeholders, and further information is expected in the coming days.

A source within the foam sector noticed that such agreements, if they remained deactivated, risk the market, kill real manufacturers and to transform Uganda's industrialization agenda into a mere coverage for high -ranking import schemes.

“This is not just about a company, but about fairness, transparency and the future of local industry,” said the source.

Since the Ministry of Finance and the Ura are silent, the public frustration continues to grow, especially among manufacturers who, despite their significant contribution to jobs, taxes and added value, feel abandoned.

This story is still developing, and deeper studies are underway to determine whether public funds have actually been paid out and who approved what and on what basis.

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