Why the new Bill on expiry goods is problematic

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OPINION

By Andrew Bakoraho Kakura

Among the Tax Bills government brought before Parliament to cause tax reforms, there is Bill No.6, introducing Excise Duty (Amendment) (no.2) Bill, 2025, which seeks to amend the principle Act, Cap 336, to provide for remission of Excise duty paid on damaged, expired or obsolete goods.

Firstly, the introduction of the Bill highlights a negative message to sectoral stakeholders that manufacturers are grappling with expiry goods for unclear reasons, but probably due to an inadequate market. In its communication shared with the media on July 15, 2024, the UNBS department urged public vigilance on the increased expiry products in the market.

Then, whereas the Bill states clearly that the affected tax payer will satisfactorily prove to the Commissioner of the Tax body before getting remissions, similar instrument is silent on the acceptable limit/ ratio or percentage of expiry goods in relation to the total goods produced either per batch or batches in a given period, and more specifically when expiry is not emanating from Acts of God.

The amendment, if considered, will give the Commissioner the discretion not only to grant the remission but also to determine the above-mentioned ratio, which, in my opinion, creates a gap which one could easily exploit to nurse personal interests. The law is likely to cause more unintended challenges than it seeks to cure.

Regarding Duty remissions elsewhere, in Rwanda, an application is made to the Council through a Commissioner under section 140 of the East African Community Customs Management Act, 2004. Different from ours, this same law mentions nothing regarding remissions on expiry goods like ours, but only takes care of imported goods required in manufacturing exports or approved goods for home use.

This same amendment is silent on the fate of stockists or retailers who buy goods from the former, pay excise duty as indirect tax to the government, and equally experience expired goods. Where is their remedy if I'm not wrong? Instead of granting Duty remissions paid on expiry goods, we could copy from our neighbours’ system cited earlier above.

Like COVID-19 and its preferred SOPs did to the global production and trade, inevitable risks like natural calamities are equally potent enough to force manufacturers and their agents to shelve goods until expiry (short shelf life) but again does one need a law to take care of such situation or such occurrences are self-explanatory as Africans normally say. Anyway, how have we been dealing with it? Has it not been common sense guiding parties truly acting in good faith?

For example, will the Tax body accept 50% of the entire production batch as expiry goods when the manufacturers present it after failing to secure a market for it due to challenges relating to poor quality or overproduction? Stating acceptable ratios, the Bill/ law would also save courts from making case laws, especially in the event a disagreement emerges between the head of Tax body and the taxpayers. Legislators and their counterparts (executive) ought to be reminded that moral laws are not written unless the practice begins in Uganda.

Manufacturers should perhaps seek other state incentives to enhance research and market-based production instead of remissions on expiry goods. A Manufacturer worth a name has to produce based on projections and market share to avoid overproduction.

Expired goods may be experienced, but their size /ratio as a fraction of the total batch production ought not to be alarming, but rather negligible. This is why the law on the remission of paid excise duty ought to specify the size of the expired goods acceptable. Better to sell goods before expiry and at lowered prices than waiting to claim remission from the Tax body, fighting tooth and nail to raise revenues to develop the country.

In Uganda, we have previously witnessed the burning of expiry drugs when public hospitals often report shortages, forcing patients to buy from private drug stores. Moreover, extra funds are sought for such activities.

Literally, the law should not only be strengthened to discourage expired goods but also stop similar categories of goods from accessing our markets, since the introduction of the said Bill amendment is proof that manufacturers are grappling with them.

Therefore, an amendment of the Excise duty should be done concurrently with the strengthening of the UNBS Act; otherwise, expired goods will flood markets undetected

The writer is the CEO Safety Watch Initiatives (SWI) and member of Tax Justice Alliance Uganda