The government has proposed a new excise duty bill, currently under parliamentary review, to revamp the juice taxation system. The changes aim to favour local production by offering a lower tax rate for juices made with domestic ingredients compared to imported alternatives. Currently, some imported juices classified as natural enjoy a lower tax rate–5 per cent–while most locally produced juices face a higher tax–39 per cent–due to their classification as non-natural, according to the government. ALSO READ: What you need to know about Rwanda’s new tax reforms The proposed changes will shift the focus to local content, offering a lower tax rate to juices with at least 30 per cent locally sourced ingredients, including water. This reform seeks to support domestic producers, simplify tax classifications, and boost the local juice industry, The New Times understands. With the new system, as long as producers meet the 30 per cent local content threshold, a lower tax rate– 10 per cent–will be charged on local juices, implying 29 per cent less than the current rate. The local content rule To qualify for the 10 per cent tax rate, juice must contain at least 30 per cent local content. This includes raw materials like fruits, vegetables, water and sugar sourced locally. Any juice that doesn’t meet this threshold will be taxed at 39 per cent, which is the current rate for non-natural juices, lemonade, and soda. Imported juices, regardless of their content, will fall under the 39 per cent tax category since they are made with raw materials from other countries. ALSO READ: Inyange Industries launches new juice flavours In line with the new policy, all locally produced juices will have to display their local content percentage on labels, allowing consumers to easily identify which juices qualify for the 10 per cent tax rate. Simplifying the tax system With the new bill, the government aims to simplify the juice classification process. Previously, there were disputes over defining natural juices, with some manufacturers trying to manipulate definitions to qualify for the lower 5 per cent rate. Now, the focus is clear: juice from fruit, vegetable or other plants whose local raw material content, is at least 30 per cent by weight of its constituent including water, qualifies for the 10 per cent rate. If it falls short of the requirement, it is subject to the 39 per cent rate. Local producers welcome tax reduction According to the 2023 law establishing excise duty, which the new bill seeks to amend, natural juice is the product resulting from the pressing or blending of fruit, vegetable or any other plant without adding any chemical or industrial product or ingredient. Local producers told The New Times that this definition means that products that qualify as natural are only those for which juice is extracted from the fruit or vegetable, without even adding preservatives that are needed for a longer shelf life. Emmanuel Mporwiki, the manager of Coopedush, a Karongi District-based firm that produces juice from various fruits including passion fruit, pineapple and strawberry, said that the proposed reduction from 39 per cent to 10 per cent is a major change. Though excise duty is a consumption tax paid by a consumer on their purchases, it is factored in the prices charged by product makers, such as juice producers. As such, the tax results in a higher charge to consumers, and may limit the sales for producers if the costs are not affordable. “The 29 per cent reduction [in excise duty] is very significant. For the consumer, it means prices go down,” Mporwiki said, adding that the development implies encouraging domestic production. Gerard Sina, who owns Entreprise Urwibutso, a local agribusiness firm making a range of products including juice, said that this is a welcome move. “This is what we want, we are looking forward to it,” he said. “It can lead to a reduction in prices, their [juices] accessibility to many, hence helping ensure market availability for fruit farmers,” he said, adding that the move can also benefit the economy through increased production.
