Govt widens tax fold with 84 non-compliant companies

Wednesday June 17 2020

Production. A brewery worker monitors a beer

Production. A brewery worker monitors a beer production cycle. Manufacturers demand that the cost of installing digital tax stamps, which is intended to assist government in efficient tax collection, should not become their burden. PHOTO | STEPHEN OTAGE  

By Dorothy Nakaweesi

At least 84 spirits companies, nine wines and four beer manufacturers and 42 water producing companies have not been paying taxes, according to a document prepared by Uganda Revenue Authority (URA).

The document, which highlights the progress of Digital Tax Stamps since last year, indicates that before September 9, 2019, there had only been nine tax compliant spirits companies and none for wine producers while compliance among water manufacturers had been weak.

However, compliance, especially among water, spirits and wine producers, according to the document, has increased drastically with the most improvements seen among water producers.

For instance, the document indicates, tax compliance among water producers, grew from 16 per cent to 58 per cent while spirits and beer producers saw compliance grow from 9 per cent to 43 and 3 per cent to 7 per cent, respectively.

Compliance among wine producers during the period from September 9, 2019 grew from zero to 9 per cent, the document indicates.

However, there was no growth among tobacco companies (1 per cent) while soda saw a dismal growth of just one percentage point from 5 per cent to 6 per cent.

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The report also indicates that as a result of implementing the Digital Tax Stamps system, URA can track under declaration, noting that a number of manufacturers had before been declaring falsified volumes of Stock Keeping Units, while weeding out products that are unfit for human consumption.

“For example, a tax payer instead of declaring 500ml would declare 300ml. This translated into monthly under declaration. With DTS [Digital Tax Stamps] implementation, URA [has been able] to know the right volumes coming off production lines,” the document, which also highlights some of the benefits of Digital Tax Stamps, reads in part.

Government, on September 9, 2019 started the implementation of Digital Tax Stamps on sprits, water, beer, soda wine and tobacco after fighting off resistance from manufacturers, who had shown concern on the cost burden that had demanded that they pay for the installation of the system.

Government had indicated that it would until June 30 shoulder the cost burden before it would be transferred to manufacturers.

However, manufacturers continue to demand that such a cost, which is intended to assist government in efficient collection of taxes, should not become their burden.

In a petition at the weekend, members under Uganda Water and Juice Manufacturers Association and Alcohol Manufacturers Association of Uganda appealed to the general public to sign a petition in which they demand that they should not be the ones to bear the cost of installing Digital Tax Stamps, especially at a time when they have been impacted by Covid-19.

“Despite government’s assurance, we have been informed that manufacturers will start bearing the cost of Digital Tax Stamps effective June 1. This cost will increase the cost of manufacturers, with far-reaching consequences for all parts of their Ugandan value chain,” the petition, which seeks public support before it is sent to President Museveni, reads in part.

DIGITAL TAX STAMPS
Tracking exports, imports
The document, which highlights progress of Digital Tax Stamps also noted that URA had started tracking exports and imports products with at least 20 importers registering for the system.
The system, the document highlights, has also enabled URA to know what new products are being introduced in the market while at the same time being able to determine whether such products meet market standard.

dnakaweesa@ug.nationmedia.com

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