URA Clarifies Excise Duty Exemptions on Plastic Packaging

The Uganda Revenue Authority (URA) has issued a clarification on changes to the Excise Duty Act, specifically addressing the taxation of plastic packaging materials.

In its latest notice, URA explained that Item 11 of Schedule 2 of the Excise Duty Act has been amended to introduce exemptions for specific plastic packaging items. The adjustment aims to ease the financial pressure on manufacturers in select sectors while maintaining the country’s tax integrity.

Under the new provisions, plastic packaging such as vacuum bags for food, juices, tea, and coffee, as well as bags used directly in the manufacture of sanitary pads, are now exempt from excise duty. URA noted that this move is part of broader efforts to support local production and promote industrial growth.

However, the authority emphasized that only verified taxpayers will benefit from the exemption. Businesses seeking relief must apply for validation, detailing the specific goods to be packaged using the exempted plastic items. This process ensures that the exemption applies strictly to qualifying products.

For other plastic packaging materials not covered under the exemption, URA maintained that excise duty will continue to apply at a rate of 2.5% or USD 70 per tonne, whichever is higher.

The clarification underscores URA’s intention to balance tax administration with economic support for manufacturers, particularly those in essential goods sectors like food and hygiene products. The Authority reaffirmed its commitment to working collaboratively with industry players under its guiding principle, “Developing Uganda Together.”

This update forms part of Uganda’s ongoing tax reforms designed to stimulate production, encourage compliance, and promote sustainable industrial development.