Cosmetics industry wants 10% tax scrapped

By Prossy Nandudu

The Government has been asked to drop the 10% tax charged on manufacturers of cosmetics so that they can use the money to expand their businesses.

The appeal was made by the marketing manager of Nevia Company, Davies Lukyamuzi, after the company was voted the best brand in the manufacture of the hair products by the People’s Choice Awards.

“The Governmet should completely eliminate the tax in the upcoming budget to allow us make cheaper and affordable products,” said Lukyamuzi.

The tax was introduced in the current financial year.

The finance minister, Maria Kiwanuka, at the time said the proposal to increase excise duty on cosmetics and perfumes by 10% would increase the country’s revenues and contribute sh4.1b to national coffers.

However, manufacturers say the tax has increased their costs of business because they also pay VAT and import duty.

“What the Government should do is to scrap the 10% so that we can continue paying other taxes at the same time creating employment for the country’s young people,” he said.

Nevia Company employs 100 people directly and more than 150 indirectly.

Lukyamuzi, however, says on top of the tax, there is unfair competition with substandard products on the market. Manufacturers of cosmetics in Uganda don’t have an association through which they can voice their concerns.

“We have these challenges because we are not united as players in the industry. Cosmetics manufacturers should drop the idea that they are competing and come together to fight some of these challenges, especially substandard products,” added Lukyamuzi.

The chief organiser of the People’s Choice Awards, George Mulindwa said the winners were chosen from 38 Ugandan companies whose brands are being consumed by the Ugandan community.

Mulindwa said the awards were aimed at identifying brands on the market that comply with the standards of Uganda.

“Ugandans are not very concerned about quality. That is why we came up with a survey which eventually lead to the awards,” said Mulindwa.