In Summary

Amended Bill. Excise Duty on non-alcoholic beverages, not including fruit juice, or vegetable juice, will be charged at a rate of 13 per cent

Kampala.

The carbonated soft drink industry in Uganda has protested the new Excise Duty tax increments on the industry which they say are going to impact the industry negatively.

Mr Amos Nzeyi, the director Crown Beverages Ltd, said if government does not implement the earlier agreed rate reduction from 13 per cent to 10 per cent, the industry will suffer. “We shall experience job cuts due to limited sales volumes. We shall also not be able to expand production and create more jobs. The government will also lose out on taxes in the long run,” he said.

The soft drink industry which comprises Century Bottling Company Ltd, Crown Beverages Ltd, Harris International, Bakhresa, SAI Beverages, and Galaxy Beverages, among others, have warned of serious impact on the industry, especially in terms of job cuts, limited investment and reduced government revenues due to the tough economic environment prevailing in the country.

The proposed Amendment Bill No.6 of the Excise Amendment Bill 2017, stipulates that Excise Duty on nonalcoholic beverages, not including fruit juice, or vegetable juice, will be charged at a rate of 13 per cent or Shs240 per littre.

According to the documents Daily Monitor has seen, industry players have had back and forth meetings and negotiations with the Budget Committee, which they say, agreed to reduce the tax by three percentage points from the proposed 13 per cent (Shs240) to 10 per cent (Shs157).

In 2016, representatives of the industry met with the parliamentary Committee on Finance, Planning and Economic Development to put forward the proposal for a reduction in Excise Duty and the Committee recommended a reduction of 3 per cent in the financial year 2016/2017.

However, on April 12 last year, a meeting was held with President Museveni at which it was agreed that owing to the financial burden and effect of an immediate reduction on tax collection targets, the recommended reduction from 13 to 10 per cent be implemented in the financial year 2017/2018.
The report of the Committee on the Excise Duty Amendment Bill 2017, observed that the Shs240 specific rate proposal, is an increase from the current 13 per cent as this presents a shift of between 1 per cent to 5 per cent depending on the manufacturers’ factory price.

Highest rate in region
The 13 per cent Excise Duty is the highest in the region with Kenya charging 7 per cent while Tanzania is at a mere 5 per cent.

The Committee said this affects Uganda’s competitive advantage from the growth and investment point of view. They guided government to reduce the rates from 13 per cent to 10 per cent to help the sector attract investment and promote growth. “This should eventually reduce to 7 per cent to make the sector competitive in the region or from Shs 240 to Shs157 per litre,” the report reads, in part.

jadengo@ug.nationmedia.com