RIP-OFF? Grace Foam bosses in sh17bn tax scandal
Fresh controversy has erupted over Uganda’s industrialisation policy after it emerged that the government, through the Ministry of Finance, committed to pay import taxes for a Chinese-owned company operating under Tangshan Mbale Industrial Park, at a time when others are struggling to stay afloat with zero support.
The company on the spot is Grace Textile International Investment Ltd, commonly known as Grace Foam, which deals in foam, and beddings (mattresses, blankets, and bedsheets).
According to documents seen by this publication, the Ministry of Finance wrote to the Uganda Revenue Authority (URA) on 20th September, 2023, referenced TPD167/238/09, committing to pay taxes for the company’s imported “intermediate textile inputs” up to 30th June, 2024.
However, a subsequent URA demand notice dated 4th September, 2024, signed by Ag. Commissioner Customs, Asadu Ksitu shows that Grace Foam had accumulated over UGX 17 billion in unpaid taxes on imports between 1st July and 4th September, 2024, two months after the government’s commitment period had lapsed.
While the Ministry had committed to meet these obligations using money from the national treasury, what remains unclear, and of significant public interest, is whether this money has actually been paid to URA or if it remains a paper commitment.
Investigations into whether actual payments were made are ongoing.
Industry insiders and import monitoring sources allege that the company is importing finished products from abroad, with branding and even “Made in Uganda” labels reportedly already printed, leaving minimal to no value addition on Ugandan soil.
“This cannot be called manufacturing,” one industry player told us, under condition of anonymity. “If the products come in branded, packaged, and ready for the market, what’s being manufactured here? What qualifies this for tax support from the government?”
In contrast, a manufacturing company, operating in the same industry, continues to meet all its tax obligations without any government assistance.
This company reportedly employs over 1000 Ugandans and contributes an average of UGX2 billion per month in taxes, totaling UGX 24 billion per year, all without being granted any tax payment support or exemptions yet their products are competing for the same market.
Meanwhile, Grace Foam is said to employ fewer than 200 workers, yet was selected for tax payments under a special arrangement not extended to any other players in the sector.
The matter was first brought to light in a letter dated 4th March 2024, authored by Kampala Associated Advocates (KAA) and addressed to the Permanent Secretary to Ministry of Finance in which legal concerns were raised about the nature of the deal.
The letter questioned the legal framework that allowed Hon. Matia Kasaija’s ministry to assume a private company’s tax obligations, and sought clarity on the criteria used in selecting Grace Foam for such benefit.
Much as the KAA letter does not accuse Kasaija’s Ministry of wrongdoing, it sparked widespread debate in both business and legal circles.
Citizens and manufacturers alike are now asking why this benefit was made only to Grace Foam, whether any measurable value has been delivered in return, how much money has actually been paid so far from the treasury, what agreement, if any, was signed between the government and the investor, and most importantly, whether the investor has lived up to their promises.
What is even more frustrating to observers is that this same tax commitment had been suspended in September 2022, pending wider stakeholder consultation, but later reinstated in 2023, with no public explanation or engagement followed, raising questions about transparency and accountability in the decision-making process.
Internal ministry correspondence shows different officers forwarding the letter across desks, with annotations indicating uncertainty and the need for guidance, a sign that even within government, the matter was not entirely settled.
While the tax commitment appears official, and the unpaid tax demand from URA confirms the company’s continued imports, no clear evidence has yet emerged confirming that URA received actual payments from the treasury.
This is now a key issue under review by investigative stakeholders, and more information is expected in the coming days.
One source within the foam sector commented that such arrangements, if left unchecked, risk distorting the market, killing genuine manufacturers, and turning Uganda’s industrialisation agenda into a mere cover for high-level importation schemes.
“This is not just about one company, but fairness, transparency, and the future of local industry,” the source said.
As the Ministry of Finance and URA remain silent, public frustration continues to grow, especially among manufacturers who feel abandoned despite their significant contribution to jobs, taxes, and value addition.
This story is still developing, and deeper investigations are underway to establish whether public funds were actually disbursed, and who approved what, and on what basis.
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