Leading tobacco firm exits Uganda over new taxes

Alliance One is expected to shut down in Uganda (PHOTO /Courtesy)

Alliance One International is planning to withdraw from the Ugandan markets citing high and taxes.

Alliance One International, a global tobacco merchant company servicing the world’s cigarette manufacturers opened a shop in Ugandan market 7 years ago.

Alliance One Uganda has been supporting tobacco farmers in all the tobacco growing regions in Uganda, that is, Hoima, Gulu, Arua where they have offices.

Media reports indicate that Alliance One Uganda will be shutting down business at the end of this year because of “unfavourable” economic disincentives.

Apparently, all the regional offices in Hoima, Gulu and Arua have been reportedly closed and the equipment has been sold off.

These regional offices have been a source of livelihood for thousands of people and tobacco farmers.

The closure of business has been attributed to the recent Tobacco (Amendment) Bill, 2021 that Parliament passed in May this year.

According to the new tobacco tax that took effect on 01 July 2021, the government will collect a tax levy of $0.8 (about UGX 3,000) per kilogramme on leaf tobacco that is exported. Government is expected to generate revenue of Shs20 Billion from the new tobacco law and promote local value addition on locally grown tobacco before export.

The new tax has been termed as “unnecessary” to the economy that is still recovering from the effects of COVID-19 that greatly hampered foreign trade.

Initially, the government was taxing only $0.2 (about Shs740) on every kilogramme of unprocessed tobacco leaf that is exported.

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