“Rescind the excise duty tax on plastics” UMA Chair to Govt
The UMA Chairman, Ms. Barbara Mulwana, has asked the government to rescind the excise duty tax on plastics in totality for its far-reaching impact on the entire manufacturing sector.
This request was made during a meeting held on the 29th October 2021 and attended to by representatives from the Ministry of Finance Planning and Economic Development, Uganda Revenue Authority (URA) and Uganda Manufacturers Association (UMA)
In her submission, the UMA Chair said that the removal of the tax on only raw materials would promote the informal sector as these materials would be availed through the black market.
“Government will lose more revenue if tax is only at the finished product accruing to growth in informality” she added.
Ms. Barbara also outlined the impact the sector has had to endure during this period, with live experiences shared by the six representatives from the affected sectors from the UMA.
She also expressed the difficulty caused by the wording of the law regarding the use of recycled material, where it focuses on input to an individual product as opposed to the industry. Practically, industries do not separate raw materials for specific products but rather bring raw materials for the industry in one batch for the different products.
According to UMA, this tax has resulted in challenges related to filling of returns; delayed implementation of exemptions and yet there is no standard for recycled material as they contain impurities which compromise final product; the HDPE hard plastics, and the food-grade plastics who can’t use recycled material.
Government acknowledged that the imposition of excise duty on plastics and especially on raw materials was unthought through and has created a lot of implementation challenges.
The Government representatives declined to rescind the tax but agreed in principle to study the effects of the law. They also committed to have it reviewed for the financial year 2022/23.
According to Government, the law cannot be rescinded at the current moment given the legal procedural requirements needed for it to be done. Hence, the law remains and shall be implemented with adjustments through regulations issued by the Minister from time to time.
The Minister of Finance shall issue regulations within the law that would facilitate its smooth implementation under the guidance of both the Uganda Manufacturers Association (UMA) and Uganda Revenue Authority (URA)
Government to provide an official response to sector-specific challenges at a macro level and all the challenges raised by UMA, through a letter, dated 3rd of September 2021.
Henceforth, all proposals from individual manufacturers or subsidiary/sector associations that relate to the manufacturing sector shall be channeled through UMA for harmonisation to avoid the adverse effects on the sector prior manufacturing sector
UMA, therefore, undertook to provide;
- A writeup on the justification for rescission of the excise duty on plastics and plastic granules;
- A plan for cleaning the environment.
- Additional list of industries/sectors that have challenges, who were not catered for as of 03/09/2021
- A wording rephrasing the 20% use of recycled materials requirement for exemption of excise duty on a product, and instead provide it as a requirement for the exemption of the industry.
- A list of the companies doing recycling.
UMA members accredited as Authorised Economic Operators (AEO)
Ten (10) UMA members have been accredited as Authorised Economic Operators (AEOs) at regional and national level by Uganda Revenue Authority (URA).
The AEO is a trade facilitation programme undertaken by the customs department in URA. Under this programme, businesses that comply with customs laws and regulations benefit from customs preferential treatments such as fast clearance of their goods through simplified procedures, and reduced inspection.
Accredited UMA members include Luuka Plastics Ltd, Comfoam Ltd, Blow Plastics (U) Ltd, Unistrong Investments Ltd, Tian Tang Group Ltd, Uganda Tobacco Services Ltd, Nile Roofings Ltd, Hong Hai Wood (U) Ltd, Mandela Millers Ltd, and Chickways (U) Ltd.
According to the URA Commissioner General, the taxpayers who have been enrolled into AEOs are those who have been compliant and exhibited resilience of continuing doing the right thing of contributing their fair share of taxes in spite of the Covid-19 situation in the country.
UMA’s take on this initiative:
Initiatives aimed at recognizing compliant members while reducing their clearance costs and turn-around time are much appreciated and we encourage all manufacturers to leverage this opportunity that will to improve the management of their supply chains.
Who is implementing AEO?
AEO is being implemented by the World Customs Organisation (WCO), an international umbrella body to which Uganda is a member.
As a program based on international instruments, the AEO program is also being implemented by other Customs administrations around the world, and currently, there are about 97 operational AEO programs worldwide.
EAC-CET Review of 115 Tariff lines
EAC CET review is anchored on Article 12(2) of the Protocol which provides for a review of EAC CET after every 5 years. Having undertaken last review in 2016, the next review was to address inconsistencies and misclassification in the current EAC CET, enhancing industrial development, increasing intra-regional trade, eliminating stays of application, reviewing the sensitive list etc.
Current EAC CET has derogated the industrialization principles with multiple stays of application and duty remission schemes on goods otherwise produced in the Region.
The East African Community Common External Tariff (EAC-CET) review reached advanced stages as at April 2021 with a few contentious issues around some items awaiting final decisions by the partner states.
Member States were tasked had to carry out further consultation concerning the tariff lines instituted on the items without consensus, to inform their national position.
Considering the current status of the CET review, the UMA shared the 115 Tariff lines without consensus reached at as per the last country negotiations.
The UMA will continue updating you on the progress of this review through our monthly newsletters.
For more details, contact