Excise duty tax and financial performance of food and beverage manufacturing firms in Kawempe Division, Kampala, Uganda

Abstract

Excise duties are indirect taxes on the sale or use of specific products (Varjan et al., 2019), such as alcohol, tobacco and energy. Government imposes and collects tax through Uganda revenue authority. There has been concern on the impositions of excise duty tax amongst foods and beverages companies in Kampala, which provoke this study on excise duty and financial performance of foods and beverages companies in Kawempe division. The main objectives of the study were to; establish the influence of excise duty tax on financial performance of manufacturing firms in Uganda focusing on firms in Kawempe Division. Specifically, the study investigated, the effects of excise regulation, excise rate and pricing models of excisable goods on financial performance of foods and beverages manufacturing companies in Kawempe division.

The design adopted was descriptive research design and took quantitative approach. Foods and beverages manufacturing companies in Kawempe were chosen and 37 respondents participated in the study. Document review guide and semi-structured questionnaires were the research tools used to extract data. Ethical considerations and quality controls were considered. The result of the study showed that there was positive significant relationship between excise tax regulation and financial performance.

The findings found out that coefficient of determination showed that the changes of financial performance of manufacturing firms is caused by excise tax rates, excise tax regulation, and pricing models of excisable goods. The study found out that by holding excise tax regulation and pricing models constant a unit change in excise tax rates will lead to a significant increase in profitability.