Unfair Tax System in Uganda Affects Country’s Beer Manufacturing Sector

Unfair Tax System in Uganda Affects Country’s Beer Manufacturing Sector
Unfair Tax System in Uganda Affects Country’s Beer Manufacturing Sector
  • The administration of digital stamps ranks amongst the top challenges facing beer manufacturing in Uganda.

The recently concluded Uganda Economic Forum amongst other resolutions has featured the need to not just address the unfair tax system in Uganda but to do so with the beer industry in focus.

In the same vein, the alcoholic sector in Uganda has opened this conversation according to The Country Managing Director, Nile Breweries Limited, David Valencia to shore up post-covid 19 investment for the East African nation, increasing liquidity in the system.

On revamping the economy, the expert further explains that the tax administration positioned appropriately can stimulate post-Covid 19 investments with the beer sector taking a lead for its huge potential.

A major strategy to allow the sector to thrive is to create fairness, especially in the tax laws by getting the digital tax stamps right, and preventing fiscal leakage from illicit alcohol. Illicit trade is becoming a thing in Uganda as almost $1 billion escapes the nation’s tax net.

Revisiting the administration of digital stamps on beer manufacturers in Uganda according to the discussion will create a level playing field for all players in the formal sector. It is also expected to increase the distribution of raw materials like ethanol that goes into the production of beer.

This strategy if implemented will also involve the effective tracking of sources, decreasing illicit players in the sector among other positive indicators of growth in the beer market.

See all what the Country Managing Director, Nile Breweries Limited, David Valencia said during the conference

“The main challenges that are facing the beer sector right now are digital tax stamps and illicit alcohol. Despite government banning sachets and implementation of tax stamps, fiscal leakage from illicit alcohol has accelerated. The value of this illicit trade in Uganda is nearly USD1B, not taxed and 1.6X larger than in 2017,”

 “Total fiscal loss from illicit trade was estimated at USD458M 2020, a 29% compounded growth rate since 2017. In practical terms, fiscal loss due to illicit alcohol doubled in 2020 versus 2017. This loss dwarfs actual collections from the formal sector

Unfair Tax System in Uganda: Response from the Government

The ministry of trade in Uganda has also responded to the demands of the Economic Forum by promising to create a conducive atmosphere for taxpayers and businesses to thrive.

Specifically, the Minister of State for Trade, Hon. Harriet Ntabazi urged the industry players to also play their part in the production of quality products, increasing competitiveness with what is obtainable globally.

The ministry also agrees on the need to formulate policies that will in no small measure address the challenges faced by beer manufacturers and improve the chances of higher tax collection.

The above call was made by Gerald Namoma, a Senior Economist at the Ministry of Finance, Planning and Economic Development.

About Uganda’s Economic Forum

It is important to state that Uganda’s Economic Forum is an annual event held in the country to provide the private sector and government officials the opportunity to dialogue about issues that affect the nation’s economy and proffer relevant solutions.

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