President Yoweri Museveni has backed the implementation of digital tax stamps on goods that are manufactured in Uganda.
Speaking at the African Tax Administration Forum, Mr Museveni told the tax collectors from across Africa in Kampala on Wednesday, that the new move to monitor the production lines of manufacturing companies will help reduce leakages
“There was a big leakage in terms of numbers and value. In Uganda, there was a lot of tax evasion,” Mr Museveni said.
A new move by the Uganda Revenue Authority (URA), launched on November 1 will see manufacturers of sodas, beers, bottled water, cigarettes, wines and spirits, place digital tax stamps on their products.
However, manufacturers will have a grace period of three months within which they must install digital stamp equipment.
The stamps, placed on top of the product are applied from an in-house computer whose servers are accessible to both URA and the manufacturers.
URA is aiming at closing a Shs4 trillion revenue gap that is lost in under fictitious declarations. The stamps are also hailed as innovative in guaranteeing product authenticity.
“I know Ugandans very well, when they earn, they go to a bar and they will indirectly pay those taxes when they drink,” Mr Museveni said.
Mr Museveni was giving a veiled response to manufacturers who had petitioned him asking for the implementation of the solution to be suspended.
Their petition came after suffering two court losses aimed at blocking the implementation of digital stamps system by URA
Uganda will be the third country after Kenya and Tanzania to implement the Digital Tax Stamps system.
Digital Tax Stamps have enhanced technology to allow revenue agencies to monitor in real time the production capacity of manufacturers and also allow consumers to cross check if products are genuine.
While manufacturers argue that Digital Tax Stamps will increase the cost of production, URA says the stamps will curtail counterfeiting of products, which also benefits manufacturers.