Beverage Companies Appeal For 2% Tax Reduction

Beverages companies have petitioned the parliamentary committee of Finance which is considering amendments in tax Bills, seeking a 2 percent reduction of excise duty tax from soft drinks to enable the sector to recover from the effects of covid-19.

They claim that investment in the industry has greatly reduced as the soft drinks companies struggle to compete with their competitors in the region.

Beverages companies including Crown Beverages, Coca-cola, and Haris International, appeared before the parliamentary committee of finance which is considering amendments in tax bills, and proposed a reduction of the Excise Duty tax on nonalcoholic ready-to-drink beverages by 2% to enable the sector to recover from Covid-19 which stressed the industry.

They claim that the industry is highly stressed with a heavy tax base which has seen dwindling investment since 2017. They believe a reduction of the 2% excise duty rate will leave them at 10% or UGX 200 per liter of soft drink and it will facilitate economic growth, improved investment, and increased employment among other things.

However, committee members asked manufacturers to go back and make the cost-benefit analysis of the reduction of the 2% excise duty tax in order to equip legislators with enough information before a decision is made  

Meanwhile, whereas the Excise Duty Amendment Bill, 2023 is proposing a 5% reduction of excise duty tax on opaque beer from 20 percent to 15 percent, translating from Shs230 to Shs150 on every liter of opaque beer, manufacturers of Kombucha drinks are up in arms seeking to benefit from the same tax waiver. The Kombucha Manufacturers Association appeared before the same committee and sought a tax reduction of 5% from 20%.

Kombucha manufacturers argued that their drink is non-alcoholic and the selective reduction of tax on opaque beer is going to put them at a disadvantage because they compete with opaque beer.

However, it wasn’t easy to convince the committee as members registered reservations that Kombucha is alcoholic and a danger to society.