Parliament rejects tax cut for beverage firms

Monday July 15 2019

Amount paid. Beverage companies currently pay

Amount paid. Beverage companies currently pay 12 per cent in Excise Duty. FILE PHOTO  

By Christine Kasemiire

Parliament turned down the 1 per cent Excise Duty tax reduction that was proposed by Finance Ministry in the 2019/20 financial year.
Speaking at the weekend to celebrate an award in which Crown Beverages was chosen as Bottler of the Year 2018 in Europe and Sub-Saharan Africa, State Minister in charge of Planning David Bahati, said Parliament declined to approve the Excise Duty tax reduction, which beverage companies had proposed in different petitions to government.
“When we went to Parliament, we had proposed a 1 per cent reduction but when we reached, there is something that happened and it didn’t pass. We want to commit that next financial year, we shall be able to reduce by 2 per cent,” he said.
Beverage companies pay 12 per cent in Excise Duty, which government had in response to different petitions, agreed to reduce by at least 1 percentage point annually to 10 per cent by the 2020/21 financial year.
The tax had been expected to reduce to 11 per cent in the 2019/20 financial year but Mr Amos Nzei, the Crown Beverage Limited chairman told Mr Bahati they are still paying 12 per cent despite earlier indication of a reduction in the levy.
According to Mr Nzei, this was a violation of government’s commitment in which it had agreed to reduce Excise Duty by 1 per cent every year from 13 per cent to 10 per cent.
“The other day, the honorable minister reduced by 1 per cent to 11 per cent, thank him for us, but when we went to Uganda Revenue Authority, the tariff was reading something different and we have already worked out the numbers and submitted them to Pepsi Cola International, they have made their contribution, now where are we going to get the 1 per cent?” he wondered
CBL, the bottler of Pepsi, among other products, have invested over $200m (Shs740b) in the last 26 years becoming one of Uganda’s largest tax payers.
Mr Bahati lauded the company’s contribution, saying Pepsi is a key local investment, which has substantially contributed to the welfare of the economy and employed a number of Ugandans.