URA, Manufacturers to assess Digital Tax Stamp to eliminate loopholes

Kampala, Uganda | THE INDEPENDENT & URN | The Uganda Revenue Authority (URA) has hailed the Digital Tax Stamps (DTS) for creating a fair market for compliant manufacturers. URA Commissioner General John Musinguzi Rujooki said that the DTS has helped to eliminate illicit goods and ensure a level playing field for manufacturers who are compliant with tax regulations.

Rujooki made the remarks while addressing manufacturers and the media at the launch of the report on the Impact of Digital Tax Stamps, organized by Private Sector Foundation Uganda in partnership with PricewaterhouseCoopers (PwC) at Serena Hotel, Kampala.

The Commissioner General committed to reviewing the concerns regarding the cost of implementing the DTS in Uganda. “Every policy bears first and foremost the interest of the manufacturer. We shall read this report page by page and work together for the common interest. The contract we have with the provider (SICPA) has details on how the cost will be reduced as we improve compliance and hit the threshold. Every time we hit the milestone, we negotiate the reduction,” Rujooki said.

He also confirmed that there have already been visible reductions in costs on stamps for spirits, beers, and Kombucha. Rujooki called upon the manufacturers to look at the bigger picture, citing that besides the pricing of the DTS, it has helped clean the market of illicit goods and ensure a fair market for manufacturers who are compliant.

“There are some areas we need to study carefully, for instance, the manufacturers of Kombuchas were not paying any tax, but they were taking up the market where those who pay tax are supplying their products. They therefore had to comply with this new experience, and they closed. That’s good in achieving the intended objective to clean the market for tax-paid products and increase the sales of those who pay tax,” he said.

Rujooki’s comments were in response to those of the East African Business Council Board Chair, also the communications director for Coca-Cola Beverages, Mr. Simon Kaheru, who contended that the costs of DTS are prohibitively high and a burden to manufacturers.

Since the introduction of DTS in 2019, URA has conducted numerous workshops and training sessions to help businesses understand the importance of DTS and integrate it effectively into their operations. Nonetheless, non-compliance remains a significant hurdle.

Ms. Agnes Ssali, the Legal Director and Company Secretary, stated that illicit trade is a sore in the belly of Uganda’s manufacturing sector. “We have 65% of illicit trade in the alcohol sector, and it has been exacerbated by DTS misuse, including under-declaration,” she said.

Reports from international institutions, such as the International Monetary Fund, have highlighted the benefits of DTS in Uganda since 2019 and in other countries with similar systems like Kenya and Tanzania