Brewery company wants two-year tax exemption

This will enable them plough back funds to local farmers.

Local beer producer, Nile Breweries, has requested for a two-year concessionary rate of 0 per cent on beer manufactured using locally sourced raw materials at its new Mbarara plant.

The $90 million Mbarara beer plant that will officially be unveiled in June, is expected to produce 5.5 million crates of beer per year.
Mr Francis Onapito Ekomoloit, the company’s corporate affairs director, told the Daily Monitor while touring the plant that the two-year excise tax concession/exemption will enable them plough back funds to local farmers, scale up the local supply chain and increase shareholders’ commitment to invest in Uganda.

“What we are asking for from the Finance ministry is a 0 per cent concessionary rate for the first two years on all locally sourced raw materials. We shall re-invest any savings from this to develop local enterprises and agriculture projects,” Mr Onapito said, adding: “As this is done, we will continue to pay excise for imported raw materials such as malt.”
This request was formally made to the ministry of finance officials last week who promised to avail feedback before the plant starts operations.
However, the beer company’s request comes at a time when tax exemptions of any nature continue to be criticised by development agencies as not economically viable.

In a tax report released by Tax Justice Network and ActionAid International recently, incentives no longer attract investment but deprive governments of huge revenues.

Uganda loses about Shs690 billion to tax incentives and exemptions according to the African Development Bank.

Mr Francis Kamulegeya, the PwC senior country partner, said a tax exemption aimed at encouraging value addition through agro processing, increasing agricultural productivity, promoting private sector investment and rural industrialisation is not bad.

He said: One needs to look at the long term benefits and wider multiplier effect that will arise from the project as opposed to focusing on the revenue that is being fore gone in the short term. This is how governments world over use one of the main tools they have at their disposal, namely tax policy, to encourage particular activities within the economy.”

nkalungi@ug.nationmedia.com