Parliament maintains sh200 tax on non-alcoholic drinks

Kampala, Uganda | THE INDEPENDENT | Parliament has maintained a sh200 per litre tax on non-alcoholic drinks that government sought to reduce in the next financial year.

In a plenary session chaired by Deputy Speaker Jacob Oulanyah, MPs on Tuesday afternoon approved parliament’s Finance Committee report on the Excise Duty (Amendment) Bill, 2019 where the committee disagreed with the government proposal to reduce the excise duty on non-alcoholic beverages.

Government had proposed a reduction from the current 12 percent or Shillings 200 per litre to 11 percent or Shillings 185 per litre in the coming financial year 2019/2020.

However, Finance Committee Chairperson Henry Musasizi reported to parliament saying that non-alcoholic beverages like Soda, energy drinks and non-fruit juices are goods which with increased consumption could negatively affect the health of the consumer.

He further noted that the reduction in the tax would lead to a loss in government revenue which is needed to improve service delivery.

Under the different new tax measures, government seeks to collect 860 billion shillings and according to documents presented to the committee, government was to lose 10 billion shillings with the reduction in tax on non-alcoholic drinks.

Parliament approved the committee recommendation with no debate on the matter.

Meanwhile, parliament approved a uniform interest penalty of 2 percent per month compounded, on late payment of all excise duty. According to the Finance Committee Chairperson Musasizi, this will improve the parent Act as it only provides for interest on unpaid duty in relation to manufactured or imported goods, with no penalty applying to excise duty on services.

Also approved by legislators is an amendment to Part III of the Excise Duty Act to provide for registration of manufacturers, importers and providers of excise able goods and services.

According to the Finance Committee report to parliament, the amendment is intended to streamline procedures for registration and for provision of excisable goods and services and reinforce the other tax reforms like digital stamps.

In a recent analysis by audit experts, PricewaterhouseCoopers (PWC), this amendment replaces the current licensing requirement with a new process for annual registration of the premises of manufacturers, importers, and providers of excisable goods and services.

PWC explains that the general registration approach is similar but includes changes like removing application and renewal fees for a license, excluding retailers and retailing activity, defines the time-frame within which a registered person should apply for renewal of the certificate of registration for example 30 days before the expiry of the certificate.

According to PWC, a fine of 400,000 Shillings each day that a person operates without a certificate of registration is imposed in the new amendment.

Parliament directed government to present a Bill to regulate Islamic financial transactions to operationalize Islamic financial transactions. Government had sought under the Excise Duty (Amendment) Bill, 2019 to empower the Finance Minister to issue regulations prescribing the equivalent tax treatment of supplies made in the course of Islamic financial transaction.

But the Committee recommended to parliament that government proposes a bill for consideration by Parliament to prescribe the equivalent duty treatment of supplies made in the course of Islamic financial transactions.

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