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URA pledges to fight illicit alcohol trade

Uganda Revenue Authority (URA) has pledged to help alcoholic beverage manufacturers, who are among the biggest taxpayers in the country, in fighting against the sale of illicit alcohol, which is currently taking the biggest market share of the alcoholic beverages industry.

John Musinguzi, the commissioner general of URA, made the commitment while commissioning Uganda Breweries Limited’s (UBL) logistics warehouse and empties hardstand, valued at Shs 17.6 billion, at the company’s plant in Luzira.

According to a report released by the Uganda Alcohol Industry Association, as of 2021, illicit alcohol makes up 64.5 per cent of the total market share, leaving legitimate manufactures with only 35.5 per cent market share.

The report also found that the government loses approximately Shs 1.6 trillion annually in unrealized taxes due to evasion of tax by the illicit traders as well as lax enforcement of existing laws that govern the production and sale of alcohol.

Musinguzi said URA has been lacking enough manpower for enforcement but they now have a new team that has just joined them and part of it is dedicated to enforcement. Musinguzi promised that enforcement standards are fully going to be conducted in order to flush out these illicit alcohol traders.

“I have been told that little alcohol is currently consumed because of the negative impacts of the economy. It is true there is limited disposable income and inflation is high, but if we redeem that 64.5 per cent market share that goes in trading in illicit alcohol, then legitimate alcohol dealers will be able to widen their market scoop,” Musinguzi said.

He added: “I welcome manufacturers like UBL to discuss strategies on clamping down on illicit alcohol trading so that whatever little market share there is can be redeemed to legitimate and bonafide tax-paying manufactures.”

Musinguzi, however, noted that it is just the enforcement bit that needs upscaling but also additional laws need to be put in place to support the regulation and development of the alcoholic beverages industry.

Andrew Kilonzo, the managing director of UBL, said even through the alcohol industry is big - only a small number of players actually are packaged and taxed. If more of the unpackaged and illicit products can be handled by legit manufacturers like UBL that are tax-complaint, the impact on the economy can shift significantly.

“URA, through the customs commissioner office, has tried to curb illicit alcohol trade. However, the problem is big because it is spread across the country. We are, therefore, willing to engage with URA to identify solutions that will enable us to transition a lot of unpacked and illicit products into packaged, taxed and certified products,” Kilonzo said.

The commissioned logistics warehouse features an empties hardstand and a beer membrane filtration (BMF) plant, which can accommodate full goods storage of 7,294 pallets and empties storage of 8,171 pallets; a forklift handling capacity of 7,350 cases per forklift per day and; a truck capacity of 132 trucks per day.

The facility will also save the brewery Shs 2.47 billion per annum and increase the brewery’s efficiency in producing, storing, and packaging products.

“We are driven by the purpose to be a beacon of excellence in manufacturing in Uganda and the wider region and by increasing our production and storage capacity, we will be able to improve efficiency, cut costs and in turn increase our tax remittances to the government in support of service delivery,” Kilonzo stated.

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