Prime
New Bill on expired goods is problematic
Author: Andrew Bakoraho Kakura
What you need to know:
- Instead of granting duty remissions paid on expired goods, we could copy from our neighbors’ systems
Among the tax bills the Government brought before Parliament to cause tax reforms, there is Bill No.6, introducing Excise Duty (Amendment) (no.2) Bill, 2025, which seeks to amend the principal Act, Cap 336 to provide for remission of excise duty paid on damaged, expired or obsolete goods. Firstly, the introduction of the bill highlights a negative message to sectoral stakeholders that manufacturers are grappling with expired goods for unclear reasons but probably due to inadequate market.
In its communication shared with the media on July 15, 2024, UNBS Communication department called for public vigilance on the increased expired products in the market. Then, whereas the Bill states clearly that the affected taxpayer will prove to the Commissioner of the tax body before getting remissions, a similar Instrument is silent on the acceptable limited ratio or percentage of expired goods in relation to the total goods produced either per batch or batches in a given period, and more specifically when expiry is not emanating from Acts of God. The amendment, if considered, will give the Commissioner the discretion not only to grant the remission but also to determine the above-questioned ratio which in my opinion creates a gap that one could easily exploit to nurse personal interests.
The law is likely to cause more unintended challenges than it seeks to cure. Like Covid-19 and its preferred Standard Operating Measures did to global production and trade, inevitable risks like natural calamities are equally potent enough to force manufacturers and their agents to shelve goods until expiry (short shelf life) but again does one need a law to take care of such a situation?
As has been the case, let common sense continue guiding parties involved as long as they act in good faith. Regarding duty remissions elsewhere; In Rwanda, an application is made to the council through a commissioner under section 140 of the East African Community Customs Management Act,2004. Different from ours, this same law mentions nothing regarding remissions on expired goods like ours but only takes care of imported goods required in manufacturing exports or approved goods for home use.
This same amendment is silent on the fate of stockists or retailers who buy goods from the former, pay excise duty as indirect tax to the government and equally experience expiry of goods. Where is their remedy if am not wrong? Instead of granting duty remissions paid on expired goods, we could copy from our neighbors’ systems cited earlier above.
For example, will the Tax body accept 50 percent of an entire production batch as expired goods when presented after manufacturers failed to secure market for them due to challenges relating to poor quality or overproduction? Producers ought to seek state incentives to enhance research and market-based production as remedies for overproduction. Expired goods may be experienced but its size /ratio as a fraction of the total batch production ought not to be alarming but negligible.
Therefore, the amendment must specify the size of the expired goods acceptable. In Uganda, we previously witnessed the burning of expired drugs when public hospitals often reported shortages. Moreover, extra funds are sought for such activities. The amendment of the Excise duty ought to discourage expired goods and cause strengthening of the UNBS Act concurrently otherwise expired goods will flood markets undetected selling goods before their expiry time is better than waiting to claim remission from the tax body fighting tooth and nail to raise revenues to develop the country.
Mr Andrew Bakoraho Kakura , CEO Safety Watch Initiatives and member of Tax Justice Alliance Uganda
