Published Date : Jan 03, 2014
Competition continues to cry out in Africa amongst various brewers in the alcoholic industry. Today, the industry is crying out for extreme lower tax regime affairs in order to stay close to the competition.
Year-on-year, the competition continues to increase, with over $90m (sh230b) worth of investment this year.
According to Nyimpini Mabunda, the Uganda Breweries boss, it is important to maintain some kind of harmony in tax regime on alcoholic beverages in East Africa. Mabunda wants to see some type of rational and streamlined decision regarding the tax policy especially on the locally sourced raw materials. Since the country brews all the raw materials, immense benefit needs to be given to the local farmers. These matters are necessary to be looked into because basic expenses like transportation, cost of energy, and taxes are comparatively higher in Uganda as compared to other countries in the world.
Today, the country is making an effort in developing its overall budget. It includes taxes on alcoholic beverages which have been shouldered by large tax rates in the market. Certainly, Uganda’s beverage industry is majorly affected by this competitiveness, added some of the prominent key players of the alcohol industry.
Uganda charges 100% excise duty on topical spirits. Products such as malt and non-malt beer are excised at 60% and 70% respectively. The Value Added Tax (VAT) are at 18% (higher in Burundi and Uganda). Kenya falls next in line at 17% and Rwanda with the lowest VAT at 15%.
The Uganda Alcohol Policy Alliance has announced 5% levy for a rehabilitation fund, whereby, companies have their mandatory 30% corporate tax incurred at all times.
Each month, other brewers such as Parambot breweries, Uganda Breweries, and Nile Breweries contribute more than sh2b in taxes to the national coffers. They have invested more than $90m this year alone.
According to Mabunda, the alcohol sector has suffered a high inflation and rise in individual debt through the year. He further notices that consumption of alcohol within the country is likely to increase in the urban sector.
The alcoholic beverages sector has incurred more than $200m creating over 20,000 jobs in the meantime. As observed in 2011, the wholesale prices of alcoholic beverages shot up to 6%, and this trend continued despite the charges seen by the international competitors in the industry.