Officials uphold government decision to levy millions in taxes on Coca-Cola agent — here’s what you should know
Uganda’s Tax Appeals Tribunal has ruled, as of late July, that Coca-Cola’s marketing agency in the country, Allied Beverages Limited, must pay the 9.7 billion UGX ($2.7 million U.S.) in value added tax that it seemingly attempted to avoid by classifying its marketing services as exports.
What’s happening?
According to regional outlet ChimpReports, the Uganda Revenue Authority assessed the marketing agency for unpaid taxes related to its activities billed to the Coca-Cola Export Corporation — or TCCEC. The URA claimed that since the services were consumed in Uganda, the company should be subject to the standard VAT rate of 18 percent.
While the TCCEC is based in the United States, the Tribunal determined that Allied’s promotional activities — such as radio, TV, and billboard ads — benefited Century Bottling Company, a Coca-Cola bottler in Uganda.
“Use and consumption of services is a question of fact … All evidence, when looked at in totality, must point to the place of use or purpose of those services being outside Uganda. That was not the case here,” the Tribunal stated, per ChimpReports.
Allied argued that its services were exports and should qualify as zero-rated for VAT since the contracting party is based in the U.S. Ultimately, the Tribunal sided with the government’s revenue collection agency, and, in addition to upholding the tax assessment, ordered Allied to pay 80 percent of the legal fees, according to Food Business Middle East & Africa.
Why does this matter?
If Allied were successful in avoiding tax payments in Uganda, it would ultimately impact the country’s economy, which still faces challenges such as poverty and inequality.
And though Allied must pay the value added tax, making things right in the eyes of the government, the situation overall may not reflect well on Coca-Cola’s image, which has been under scrutiny for various reasons — including its status as one of the world’s worst plastic polluters.
The American multinational corporation has taken steps to reduce its plastic use. For instance, a Philadelphia-based bottler switched from plastic rings to paper packaging for Coca-Cola products in 2022.
The company has also mounted numerous recycling efforts to reduce plastic litter.
Meanwhile, it has been linked to cruel practices by one of its sugar suppliers, which was recently ordered to pay a settlement to hundreds of Cambodian families who were displaced when land was cleared to build a plantation years ago.
Consumers who patronize the brand could see their dollars as helping to perpetuate such practices, with potential humanitarian and environmental impacts.
What can consumers do to hold companies accountable?
Consumers can hold a lot of power, essentially voting with their buying dollars to support the brands and business practices they believe in.
Coca-Cola has made some strides of note in the last several years to become more sustainable and invest in communities around the globe — for instance, by planting trees in Cambodia.
But it’s always a good idea to watch out for greenwashing from any company, whether it’s a major, globally recognized brand or a smaller seller. Doing research on a company’s overall environmental track record and looking for credible third-party certifications can help consumers make more informed decisions and ensure they’re giving their hard-earned money to companies that deserve it.
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