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 currently undervalued business.
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’.
Kalungu West MP, Hon Joseph Ssewungu wondered if the new tax will not discourage potential investors in the tobacco business.
“Now that major tobacco firms such as British American Tobacco have taken their business from Ugandan to Kenya, won’t this new tax discourage more investors?” asked Ssewungu.
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.