Finance Minister Matia Kasaija has said government had anticipated manufacturers to resist implementation of digital tracking solutions because the system has exposed illegal activities orchestrated by some industrialists.
Digital tracking solutions, which are being implementation by Uganda Revenue Authority (URA) and lately Uganda National Bureau of Standards (UNBS), seek to fight under declaration of production capacity and substandard goods.
However, they continue to face resistance particularly from manufacturers, who say they have a high cost burden.
Speaking in a telephone interview last week, Mr Kasaija told Daily Monitor manufacturers cannot be happy because now government “knows what they are doing”.
Some manufacturers, he said, had been under declaring their production capacity thus denying government substantial revenue while others had been involved in production of substandard goods.
“Some of those manufacturers are my friends but they can do funny things. They cannot be happy because we have entered into their bedrooms [sic].
They were doing their own things, nobody knew then. But now we know,” he said, noting that digital tracking solutions had afforded government an opportunity to understand what every manufacturer produces as well as getting the right amount of taxable revenue.
Since the introduction of digital tax stamps by URA, Mr Kasaija said, revenue from beverages, wine and mineral water companies, among others, had tripled, noting the system has also brought new companies, which had not been paying taxes, in the taxable fold.
However, he did not give details on how much was being collected, saying government will first run a full year to have a better understanding of generated revenues.
In September last year, government, amid resistance from manufacturers, implemented the digital tax stamps for producers and importers of cigarettes, wine, spirits, beer, mineral water and soda, among others.
The implementation, government said then, sought to stop under declaration as well as curbing the manufacture of substandard goods.
At the weekend, Mr Kasaija said it was important that Ugandans support the digital tracking solutions because it will not only help government to improve its revenues but curb proliferation of substandard goods.
“With the digital tracking solutions there is no way they can under declare. The system will catch them and it has caught some already. Secondly, through UNBS, everybody [manufacturer] will be forced to produce goods that are within set standards,” he said.
Last year, UNBS said 54 per cent of goods on the Ugandan market were substandard.
While conducting a stakeholders meeting in Kampala recently, UNBS noted that the continued proliferation of substandard goods had warranted a review of its regulation to introduce digital tracking solutions to fight the sale of fake and counterfeited goods.
The digital tracking solutions, which will cost manufacturers Shs42 per product, according to UNBS, will enable consumers to verify substandard products.
However, the planned implementation has drawn concern from manufacturers with Trade Minister Amelia Kyambadde expected to hold a meeting with UNBS this week to discuss the impasse.