In a move aimed at bolstering local industries and promoting economic growth, the government has authorized 35 domestic manufacturers to import over 213,000 tonnes of sugar for industrial purposes without incurring import duties in the current fiscal year.
The initiative, outlined in the East African Community (EAC) Gazette issued on August 4, offers a vital boost to these approved manufacturers, fostering increased production and competitiveness.
The 35 companies listed in the Gazette include prominent names like Gisagara Agro Business Industries Ltd, Inyange Industries, Rugali Agro Processing, Masaka Creamery Ltd, Blessed Dairies Ltd, ADMA International Ltd, Skol Brewery Ltd, Mukamira Dairy, Sina Gerard, Rwanda Banana Wine Ltd, BRALIRWA, CETRAF, Sky Drop Industries Ltd, and Africa Improved Foods Ltd.
Varying quantities of sugar have been granted import privileges, with allocations ranging from three tonnes to a substantial 60,000 tonnes, tailored to meet the production needs of each manufacturer.
Primarily earmarked for the creation of beverages such as soft drinks and beer, as well as various food products for the local market, this strategic import initiative aligns with Rwanda's broader economic vision. The government had initially planned to impose a 25 percent import duty rate on sugar for the ongoing financial year. However, this recent development underscores the government's commitment to stimulating domestic industrial growth.
Finance and Economic Planning Minister, Uzziel Ndagijimana, explained that the decision to grant duty-free import privileges was part of Rwanda's comprehensive tax proposal to the EAC Partner States. The proposal encompasses a stay of application scheme, involving preferential import duty treatment to ensure essential goods' affordability for citizens, and a duty remission scheme designed exclusively for local manufacturers.
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This innovative scheme provides preferential tariff rates on production inputs, effectively lowering production costs, enhancing price competitiveness, and attracting investments.
Minister Ndagijimana highlighted the scheme's transparency, with regular quarterly submissions outlining beneficiaries and quantities of products to the Rwanda Revenue Authority (RRA) and subsequently to the EAC. The scheme's flexibility enables new applicants to join the list of beneficiaries during each quarter.
Nonetheless, the privilege of duty remission is not without its conditions. Products manufactured using the imported sugar and sold in other EAC Partner States will incur duties, levies, and additional charges as stipulated by the EAC Common External Tariff.
The Finance Minister emphasized that although the standard EAC import duty rate for sugar stands at 100 percent, Rwanda applies a more favorable stance by levying a 25 percent rate on sugar for normal consumption and a zero percent rate on sugar earmarked for industrial use.
While these measures entail a temporary loss in import duty revenues, the resultant benefits in terms of domestic industrial growth, job creation, increased tax revenue, and enhanced consumer pricing dynamics more than justify the forgone tax income.
