Parliament passes Tobacco Control Bill to boost exportation of processed products

Ugandan traders dealing in exportation of unprocessed tobacco leaf will now be required to pay a tax of about shs3,000 per kilogramme order to boost the exportation of processed products.

This tax comes with the passing of the Tobacco Control (Amendment) Bill, 2021 on Monday, 03 May 2021.

 

The Vice Chairperson of Parliament’s Committee on Finance, Planning and Economic Development, hon Jane Avur Pacuto said that since 2015, firms have been exporting unprocessed tobacco leaf without paying an export levy causing financial loss to government.

 

Pacuto added that traders were also registering losses following a decline in the value of unprocessed tobacco leaf on the world market.

She told Parliament that the new tax is expected to motivate traders to embrace exportation of processed tobacco which she said is of a higher value internationally.

“This tax will enhance value addition where a kilogramme of processed tobacco leaf costs almost five times that of unprocessed tobacco,” said Pacuto adding that, ‘this will in turn create employment for Ugandans and is expected to generate revenue of shs20 billion’.

The new law stipulates what constitutes unprocessed tobacco which was previously ambiguous. As a result the new import tax excludes cutrag, threshed stem, threshed strips, threshed loose leaves or threshed lamina.

 

Parliament past other six bills which include; The Sexual Offences Bill, 2019, The External Trade ( Amendt) Bill,2021, The Tax Appeals Tribunal  (Amend't) 2021, The Mining (Amendt) Bill,2021, The Fish (Amendt) Bill,2021, and The Income Tax [Amendment] Bill, 202.

 

However, Parliament rejected The Traffic and Road Safety Act (Amendment) Bill 2021 seeking to introduce a license fee for motor vehicle owners payable annually.

The Bill which was presented to Parliament in April  by the government failed to meet favour with the Committee on Finance, Planning and Economic Development who unanimously recommended that it is dropped.

Hon. Jane Pacuto Avur who presented the committee report to on Monday 03 May 2021 said they see the proposal as double taxation since the motor vehicles are met with a tax when they come into the country.

 

According to the committee, the tax would impose high cost of doing business for those in the tourism industry and companies running large fleets since they would have to pay annual license fees.

“Government had earlier in 2007 repealed the same tax and introduced it as tax on fuel because it had a negative implication. It causes difficulty in tax compliance and administration often resulting in corruption tendencies,” Pacuto added.

The committee proposed that the government considers imposing indirect taxes in this sector as a means to collect revenue.