Parliament has maintained the 200 Shillings per litre tax on
non-alcoholic drinks that government sought to reduce in the next financial
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
However, Finance Committee Chairperson Henry Musasizi reported to parliament
saying that non-alcoholic beverages like Soda, energy drinks and non-fruit
juices are sin 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
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Parliament approved the committee recommendation with no debate on
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
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
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
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.