How evidence-based collaboration shaped Uganda's beer excise reform

Summary

In 2025, Uganda revised its beer excise duty structure for the first time in eight years. Previous reform efforts had been complicated by the need to balance revenue mobilisation, administrative feasibility, and industrial policy objectives. When well designed, excise duties can provide a stable source of revenue, be fairly straightforward to administer, and help to address the social costs of unhealthy consumption. Developing a policy framework that meets these objectives requires careful analysis and effective coordination across institutions.

The Government of Uganda's review was undertaken through a collaboration between the Ministry of Finance, Planning and Economic Development (MoFPED) and TaxDev, drawing on analytical work conducted over several years. In addition to rationalising the excise structure and increasing the minimum price floor per litre of beer, the reform – which was enacted in June 2025 – was expected to generate approximately UShs 12.5 billion (around US$3.6 million / £2.7 million) in revenue in 2025/2026.

The policy challenge

Uganda's 2019 Domestic Revenue Mobilisation Strategy identified the rationalisation of excise tax structures as a policy priority. The beer excise regime previously applied a three-tier structure differentiating products based on composition and price bands, using a hybrid of specific and ad valorem rates. Over time, this structure had become less aligned with production costs and increasingly difficult to administer.

Two issues in particular needed to be resolved. Increased production costs meant that the ad valorem rate almost always resulted in a higher tax burden, rendering the specific rates largely redundant. This weakened the link between tax liability and the volume of beer consumed - the metric most directly tied to potential harm - limiting the system's ability to achieve both fiscal and public health objectives. The middle tier also applied infrequently, contributing little meaningful differentiation while adding complexity.

The impact

MoFPED led the review of the beer excise duty regime in collaboration with TaxDev and other partners. Using our policy appraisal framework, TaxDev supported MoFPED by modelling revenue implications and price effects, assessing potential behavioural responses, and reviewing administrative considerations and the potential impacts on domestic production. The analysis also drew on international experience to inform the design of the revised structure, and several alternative scenarios were developed to allow policymakers to consider trade-offs between revenue objectives, complexity, and implementation feasibility. The design of different reforms options was refined through consultations involving MoFPED, the Uganda Revenue Authority (URA), TaxDev, and industry stakeholders. 

Based on this, MoFPED developed a reform proposal with two main changes:

First, the middle excise tier for clear beer made from locally grown and malted barley was proposed for removal. In practice, this tier applied to a limited share of production, as beers meeting this definition generally also satisfied the local raw material threshold and were taxed under the lower tier — making it largely redundant.

Second, the specific rate applied to the lowest tier — covering beer produced using at least 75% local raw materials — was increased, while retaining the existing hybrid structure combining specific and ad valorem components. 

On 30th June 2025, the President of Uganda enacted the Excise Duty (Amendment) (No. 2) Act, 2025 to incorporate these changes. At the time, the reform was projected to raise UShs 12.5 billion (around US$3.6 million / £2.7 million) in 2025-2026, alongside an average retail price increase of 3.5% for this beer category. The effective excise duty per litre rose from UShs 1,145 to UShs 1,350, representing an 18% increase.

In addition to simplifying the tax structure, this reform aligns with government priorities, including support for local value addition and consideration of alcohol-related social costs. By raising the specific-rate floor, it increases the minimum tax paid per litre regardless of price — strengthening a de facto minimum price floor for the lowest-cost beer products, where harmful consumption may be a particular problem.

The reform also reflects a strengthening of the policy process, where high-quality evidence, government policy priorities, and institutional collaboration combine to support improved policymaking — potentially setting a precedent for reform of other duties.

Lessons and next steps

Uganda's experience highlights several lessons relevant to other countries undertaking excise reform:

• Rigorous analysis and modelling can help depoliticise tax reform and build confidence among policymakers and stakeholders by grounding debate in evidence rather than competing interests.
• Simplifying excise structures can pay dividends. Removing rarely used or redundant tiers reduces administrative complexity, improves transparency, and can support better compliance.
• Excise reform requires carefully balancing revenue objectives, behavioural responses, and the social costs of harmful consumption. Robust modelling makes it possible to estimate the potential effects and present them transparently, enabling more informed policy decisions.
• Analytical collaboration between Ministries of Finance and technical partners can support government-led reform processes and help to better align policy design with national objectives, while remaining locally owned.

In future, lessons from Uganda's reform will inform TaxDev's work with other partner governments as they seek to update and improve their own excise systems.