In January, the East African Court of Justice’s First Instance Division handed the British American Tobacco ((Uganda) Limited a reprieve after restraining and prohibiting the Government of Uganda and the Uganda Revenue Authority from collecting excise duty from the cigarette manufacturers. The regional court cited discriminatory rates. But now the government has appealed the decision.
Uganda has appealed against a regional court’s decision restraining the government from determining tax rates on tobacco products imported from Kenyan subsidiary of British American Tobacco Uganda.
Uganda argues that the decision by the East African Court of Justice’s First Division Instance could have arisen from a matter of conflict of jurisdiction.
The British American Tobacco company, previously operating in Uganda, shifted base to Kenya but successfully protested attempts by government to tax it on foreign based factory rates.
According to the Common Market Protocol, goods manufactured in East African countries, which are a party to the Treaty, should be taxed on local rates lower than levies on foreign based factories.
Through the Excise Duty (Amendment) Act 2017, the legal instrument that determines taxation rates, Parliament nonetheless levied foreign tax rates on the company, which prompted the protracted legal battle.
Uganda Revenue Authority moved to impose excise duty on BATU’s cigarettes products imports from Kenya as the Uganda firm opted to deal directly with its Kenyan subsidiary to serve the local market.
BATU sued URA before the Arusha-based court in last August, claiming that the new excise duties imposed on cigarettes imported from Kenya into Uganda were discriminatory and in contravention of regional customs regulations.
Rising on matters of national importance – a plenary segment which allows MPs to introduce urgent issues, MP James Kakooza (Ind., Kabula) said the ruling has caused revenue shortfalls.
“One company is importing and paying less than what we passed in the law. This means that government is losing revenue totaling to Shs4.4 billion,