Uganda’s top cigarette importer announces rebounding profit

Uganda’s top cigarette importer announces rebounding profit
Eazzy Banking

The country’s biggest cigarette importer and distributor British American Tobacco Uganda Limited posted profit after tax of Ushs. 13.7 billion and paid Ushs 90.5 billion in tax to the Government as per its audited results for the full year 2018.

Commenting on the results, Managing Director Mr. Mathu Kiunjuri said: “Despite a challenging business environment and growth in the illicit trade of cigarettes, British American Tobacco Uganda (BAT Uganda) posted a strong set of results in 2018 – with profit after tax of Ushs. 13.7 Billion in 2018. The improved performance is attributed to positive outcomes from our productivity improvements and focus on our value brands, ensuring we continue to provide consumers with the products they want in the market.”

Mr. Kiunjuri further reiterated that, ‘’BAT Uganda remains a significant contributor to Government revenues, contributing Ushs. 90.5 Billion in the form of Excise Duty and VAT for the full year 2018.”

In his remarks after the announcement, the Chairman of the board, Dr. Elly Karuhanga, said:

“In 2018, BAT Uganda delivered tangible results for its shareholders by focusing on initiatives that improved productivity as well as driving sales of its key brands. Key to delivering this is a regionally integrated infrastructure network. We therefore applaud the Government’s investment in infrastructure projects and the ambition to address the cost of doing business in Uganda. We however seek the Government’s support in addressing the negative impacts of illicit trade which results in billions of Uganda Shillings being lost in Government revenues and presents a threat to legitimate business.”

British American Tobacco Uganda Limited posted profit after tax of Ushs. 13.7 billion as shown in an extract of the 2018 financial results.

Health advocates and environmentalists have, among other things, blamed tobacco firms for rapid soil degradation through excessive use of chemical fertilisers; deforestation for leaf curing; encouraging child labour on farms and the rise in tobacco-related diseases. Parliament recently draft law that outlines stringent measures of production and sale of tobacco products, making it hostile and riskier to invest in the sector.

In January 2018, the company won a reprieve from additional taxes imposed by the Excise Duty (Amendment) Act, 2017. The amendment of the law imposed a higher tax on BAT’s cigarettes, which are imported from Kenya. Previously, the law imposed a uniform excise duty to goods from any of the East African Community Partner States.

The 2017 amendment distinguished between goods that were manufactured in Uganda and those that were imported, As such, the Uganda Revenue Authority reclassified the cigarettes as goods from a foreign country and served notice for payment of additional taxes.

BAT Uganda challenged the law in the East African Court of Justice, which ruled against Uganda. The court said that the amended law’s distinction between locally manufactured goods and imported goods violated sections of the treaty for the establishment of the East African Community, the Customs Union Protocol and the Common Market Protocol.

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