Govt loses UGX.30b annually in smuggled cigarettes – report

Govt loses UGX.30b annually in smuggled cigarettes – report

Billions of shillings lost over smuggling of cigarettes in Uganda (PHOTO/File). KAMPALA – The government loses approximately Shs30 billion in revenue annually in form of smuggled cigarettes, a report commissioned by British American Tobacco (BAT-Uganda) shows.

According to BAT Uganda managing director Kirunda Magoola, 44 per cent of illicit cigarettes sold in Uganda are smuggled across the border.

“Estimates show that the government loses approximately Shs30 billion in revenue annually. Towards the end of 2020, we commissioned third-party research which found that 17.4 per cent of cigarettes sold in the Ugandan market were illicit. Further, about 44 per cent of illicit cigarettes sold in Uganda are smuggled across the border; primarily tax-evaded cigarettes from Kenya,” he said.

“To address this problem, we believe that a multi-pronged approach would be most effective, including enhanced factory, border and supply chain control processes. To facilitate this and augment the benefits of URA’s digital tracking system, we call upon the government to urgently ratify the World Health Organisation (WHO’s) protocol to Eliminate Illicit Trade in Tobacco Products (ITP),” added Magoola.

BAT Uganda chairman, Dr. Elly Karuhanga also called on the government to consider a sustainable and predictable tax regime, to curb the growing illicit problem that continues to cause disruptions to the legitimate tobacco trade. He says this will help the economy build liquidity as it slowly gains momentum and returns to normalcy.

“Additionally, we reiterate our support for balanced and well researched regulation in the acceleration of our business and industry transformation agenda. As such, we will engage transparently with the relevant authorities with a view to putting in place a sustainable regulatory treatment for new category products in Uganda, in line with our harm reduction agenda. Our ambition to reduce the health impact of our business is front and centre of our sustainability agenda and central to meeting the ever-evolving needs of our consumers,” said Karuhanga.

The two made the remarks while announcing a Shs 162 billion gross revenue and Shs 29 billion profit before tax in 2020 – a 30 per cent increment.

The company in 2020, made contributions of government tax amounting to Shs 91 billion, a reduction by 5 per cent from last year’s contribution caused by low sales and illicit trade according to the company press release.

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