British American Tobacco Uganda (B.A.T) has said the increased taxes on cigarette imports greatly contributed to the increased rate of smuggling of the product especially from neighboring Kenya.
Starting with the financial year 2017/18, government put a charge of shs75000 per 1,000 sticks of imported cigarette sticks and shs 100,000 per 1,000 sticks of hinge lid cigarettes.
Uganda Revenue Authority last month announced they had lost shs200 billion to cigarette smuggling in the past one year.
Speaking during the annual meeting for British American Tobacco Uganda Managing Director Mathu Kiunjuri said there is a direct relation between the increase in the rate of smuggling with the increase in taxes on cigarette imports.
“There is a direct relationship between an increase in excise duty on cigarette imports and increase in illicit trade,”Kiunjuri told journalists told journalists on Wednesday.
“This not only affects BAT but also government because taxes reduce.”
Cigarette smuggling had reduced significantly over the past few years following a surge in the 90s but according to the tax body, the vice has resumed.
According to URA, cigarettes are high value imports prompting many to engage in smuggling.
According to BAT Uganda, the company’s gross revenue grew by eight percent and they made a profit after tax of shs12.07 billion.
“In 2017, excise duty, VAT payments and corporate tax charges increased by shs7.4 billion to shs81 billion compared to 2016,”said the BAT Uganda chairman Dr. Elly Karuhanga said.
BAT recently closed its tobacco – processing plant in Kampala and is currently involved in importing cigarettes from the neighboring Kenya.