- Proposed amendment of the Excise Duty Act, 2014
by inserting immediately after the definition of “export” the following—
“fruit juice” means unfermented liquid extracted from the edible part of a fresh fruit, whether the extracted liquid is diluted or not;”
Implications/Comments
This proposed amendment introduces a definition of fruit juice. Fruit juice is subject to excise duty under Item 5(b) of Schedule 2 to the Excise Duty Act. The purpose of this amendment is to bring clarity to the law.
- The principal Act is proposed to be amended in section 2 by inserting immediately after the definition of “tribunal” the following—
““un-denatured spirits” means spirits that are not mixed with any substance so as to render the spirit unfit for human consumption or capable of being rendered unfit for human consumption and includes neutral spirits or alcoholic beverages made from neutral spirits that are fit for human consumption;”
Implications/Comments
This amendment introduces a definition of undenatured spirits. Undenatured spirits will be taxed in the proposed amendments to Item 3 of Schedule 2 to the Excise Duty Act. The purpose of this amendment is to bring clarity to the law.
- The principal Act is proposed to be amended in section 2 by inserting immediately after the definition of “value added tax” the following—
“vegetable juice” means unfermented liquid extracted from the edible part of a vegetable, whether the extracted liquid is diluted or not;”
Implications/Comments
This amendment introduces a definition of vegetable juice. Vegetable juice is taxed in the proposed amendments to Item 5(b) of Schedule 2 to the Excise Duty Act. The purpose of this amendment is to bring clarity to the law.
- Proposed amendment of Item 2(d) of Schedule 2 of the principal Act.
Schedule 2 to the principal Act is proposed to be amended to reduce excise duty on opaque beer from 15% or 230/= per litre, whichever is higher to 12% or 150/= per litre, whichever is higher.
Implications/Comments
Opaque beer is made primarily from locally sourced raw materials. This proposal is therefore intended to promote value addition and use of locally sourced raw materials.
- Proposed amendment to Item 3 of Schedule 2 to the principal Act
Item 3(a) – Un-denatured spirits of alcoholic strength by volume of 80% or more made from locally produced raw materials taxed at a rate of 60% or Shs.1500 per litre whichever is higher.
Item 3(b) – Un-denatured spirits, of alcoholic strength by volume of 80% or more made from imported raw materials taxed at a rate of 100% or Shs. 2500/= per litre, whichever is higher.
Implications/Comments
This introduces the use of alcohol strength by volume in determining the tax treatment of undenatured spirits. This adds clarity to the tax law.
- Item 3(c) of Schedule 2 to the principal Act is proposed to be amended as follows:
un-denatured spirits that is locally produced of alcoholic strength by volume of less than 80% is maintained at 80% or UShs.1700/= per litre, whichever is higher;
un-denatured spirits that is imported of alcoholic strength by volume of less than 80% is taxed at 100% or UShs.2500/= per litre, whichever is higher.
Implications/Comments
This replaced the provision dealing with ready to drink spirits. This provision introduces a distinction between the tax rate for undenatured spirits with alcohol strength by volume when imported (100% or Ushs 2,500) and when locally produced (80% or UShs.1700/=).
“fruit juice and vegetable juice, except juice made from at least 30% pulp or at least 30% juice by weight or volume of the total composition of the drink from fruits and vegetables grown locally.”
Implications/Comments
The current provision suggests that the requirement of 30% applies to the pulp content in the juice. The proposed amendment applies the 30% on the total juice content requiring that the pulp be 30% of the total content.
It is doubtful that the requirement of 30% pulp from locally sourced fruits is industrially viable as such juice would likely be too expensive. It appears that this provision is intended to limit the preferential treatment of NIL excise duty to very few players in the industry, if at all any.
- Schedule 2 to the principal Act is proposed to be amended byby substituting for item 5 (d):
“any other non-alcoholic beverage locally produced other than a beverage referred to in paragraph (a) made out of fermented sugary tea solution with a combination of yeast and bacteria” taxed at the excise duty rate of 12% or 150/= per litre, whichever is higher.
Implications/Comments
This reduces the excise duty rate from 12% or shs.250 per litre whichever is higher to 12% or 150/= per litre, whichever is higher. These are non-alcoholic kombucha drinks which are largely manufactured by small scale producers using locally sourced raw materials. This provision is therefore meant to support local industry growth.
Schedule 2 to the principal Act is proposed to be amended in item 13 (g), by inserting the words “the United Republic of Tanzania” immediately after the word “Kenya”.
Implications/Comments
This removes excise duty on incoming international call services of USD Cents 0.09 per minute on calls originating from the United Republic of Tanzania. This proposal is intended to facilitate the United Republic of Tanzania to join the one Area Network under the East African Community.
Schedule 2 to the principal Act is proposed to be amended in item 25 by substituting for paragraph (b) the following:
“any other fermented beverages including cider, perry, mead or near beer produced from locally grown or locally produced raw materials”
Implications/Comments
This is to correct a clerical error in the wording of other fermented beverages including cider, perry, mead, spears or near beer produced from locally grown and produced raw materials. This removes ambiguity in the current law.
- Proposed amendment to Item 26 of Schedule 2 to the principal Act
Schedule 2 to the principal Act is proposed to be amended in item 26 by substituting for item 26 the following:
“construction materials of a manufacturer, other than a manufacturer referred to in item 21, whose investment capital is at least thirty five million United States Dollars in the case of a foreigner or five million United States Dollars in the case of a citizen”
Implications/Comments
The purpose of this proposed amendment is harmonizing incentives under the domestic laws available to both citizen and foreign investors whose capital investment is thirty-five million United States Dollars. This creates a coherent incentives framework that cuts across the domestic tax laws.
