Manufacturers operating at night to evade digital tracking system

Kampala, Uganda | THE INDEPENDENT | Several manufacturers have resorted to distributing their products at night and in unbranded delivery vehicles, to beat the enforcement of the Digital Tracking Solution (DTS).

The DTS involves putting a stamp on the product as proof that the targeted product has met the regulatory requirements, including payment of tax, and the set national standards before it is put out onto the market.

Last month, several companies were apprehended after their products were found on the market without the stamp.

On Tuesday, Uganda Revenue Authority (URA) confiscated over 2,000 unstamped products from Bee De Eff (BDF) Spirits Limited, including Sports gin, Spark Waragi, and Captain Cherry.

They were distributed in the night, according to URA Acting Assistant Commissioner Public and Corporate Affairs, Ian Rumanyika.  Others bear forged stamps which, when subject to a machine reader for verification, do not give any data.

“It has also come to the Taxman’s notice that some manufacturers and importers have resorted to forging these stamps from printing facilities but these will be countered by the stamp verifier technologies,” Rumanyika says.

By the end of February 2021, URA had recovered over 3.5 Billion Shillings in revenue after netting 33 DTS flouters who were caught manufacturing, selling, exporting or distributing gazetted goods without the tax stamps. 

DTS was operationalized in November 2019 with six products, namely beer, soda, water, wines, spirits, and cigarettes gazetted by the Minister for Trade to apply digital tax stamps. 

“After several failed attempts at manipulating the production line, some manufacturers and importers decided to outsmart the DTS system’s enforcement team by sending out products using unbranded vehicles,” he says.

Rumanyika adds that the URA enforcement team wondered how seemingly “clean” production lines infiltrated the market with products that are not stamped.  

The DTS was also aimed at ensuring that smuggling and evading taxes, in particular, was made costly.

Section 19 of the Tax Procedure Code (TPC) imposes a penalty of 50 Million Shillings or 50% of the value of unstamped goods whichever is higher, for failure to affix a digital stamp on the gazetted products.  

Of recent, some manufacturer’s premises have been sealed off and owners penalized when found issuing products bearing not stamp. Other products recently impounded include Forest Ice Waragi, Babalo Mixed Fruit Wine and Songa Waragi Dry Gin, all got in Busia.

Fake stamps were also found in Hoima on goods produced by Parambot distillers, including Royal Vodka and Club One flavoured Gin. Those confiscated in the Kikagati Customs area include Ice and Soldier Gin, while Azam Malt cartons from Tanzania, were impounded at Ntuura Customs.

More than 10,000 cartons (bomba) of Supermatch King Size Cigarettes made in South Sudan were confiscated in border areas in Northern Uganda and at Madi Opei, West Nile. 

A recent enforcement operation raid that focused on retailers and stockists led to the confiscation of many unstamped products on the market.  They included Spot Gin Waragi, City Arrow, Ice London Dry Gin, Soldier Gin, Ssenta Gin, Vinno Waragi and Napoleon Gin.

Others were Sanyuka Gin, Vision waragi, Aqua Thirsty, Impact Cane, Sabula Waragi, King Kane, Storms Waragi, Beckam Gin, Hitler African No.1 Beer, and Red Sorghum Whisky. 

For over one year now, URA a total of 315 businesses have been registered on DTS comprising of 247 manufacturers and 68 importers, against an initial target of 107 manufactures and 33 importers, according to URA.

Earlier this year, URA started the KAKASA campaign that is sensitizing both traders and consumers on several products including DTS.

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