Gov’t to meet cost of digital tax stamps for one year

Kampala, Uganda | THE INDEPENDENT  | The government has agreed in principle to foot the bill for the installation of digital tax stamps equipment and the stamps themselves for manufacturers for at least one year.

Uganda Revenue Authority had set November 1 as the deadline for companies to install the stamps, which are expected to combat illicit trade, seal revenue leakages and increase efficiency in managing taxpayer compliance.  The tax body single-sourced Swiss Company, SICPA, a worldwide leader of security inks, to provide the technology for the stamps.

But the manufacturers were up in arms, with some threatening to close down their plants for a day in protest of the cost of the stamps and the tight deadline of 1 November 2019, where the government wanted them to have installed the stamps.  They had written to Trade Minister Amelia Kyambadde, seeking government’s commitment to cover the cost of implementing digital tax stamps.

Reports now indicate that the government will pay up to 1 trillion Shillings in the cost for the initiative.

Simon Kaheru, the Corporate Affairs and communications director at Coca Cola Beverages Africa and Rwenzori Bottling Company, said their only contention now is to see this position reflected in the tax regulations. Kaheru said there were engagements still ongoing and they believe the deadline is untenable.

Vincent Seruma, the URA assistant commissioner for corporate affairs, told URN that they were moving on a good note with the manufacturers and they would ensure that all issues they had were ironed out. Seruma added that the government does not need to change the law to make payments for the year.

According to Seruma, a stamp will cost between 15 to 200 Shillings per item, depending on what you will manufacturing. Seruma said a stamp on a bottle of water will be 15 Shillings per bottle, 50 Shillings per bottle of beer and 185 Shillings on wines and spirits. This cost will be passed onto the final consumer.

Digital tax stamps are physical paper stamp which are applied to goods or their packaging but in this case contain security features and codes to prevent counterfeiting, tamper-proof features. They will also have the track and trace capabilities to enable; consumers validate the stamp, traders and manufacturers track the product movement and government to monitor compliance of the product and stamp.

The battle against the URA digital stamps has been on since 2017 when the Authority mooted the idea. Uganda Alcohol Industry Association, an umbrella body of sellers and manufacturers of alcohol, wrote extensively urging URA to drop the idea.

Patrick Ocailap, the Deputy Secretary to the Treasury said in May that digital stamps were one of the initiatives government was to use to boost revenue in the coming financial year.

URA has a target of 20 trillion Shillings for the 2019/2020 financial year. The tax body is expected to generate 48 billion Shillings this financial through administering of the stamps.

Even after one year, the manufacturers will still foot the cost of the stamps.

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URN