Excise duty revenues grow by 13% 

Government is counting on digital solutions such digital tax stamps to improve tax administration. Photo / File 

What you need to know:

  • Whereas collections from local excise duty had dipped to 7 percent in 2020 due to Covid-19, they have recovered to an average of 13 percent 

Local Excise Duty collections increased by an average of 13 percent between 2020 and 2023, surpassing the historical average of 12 percent. 

The findings are contained in a draft report by Private Sector Foundation Uganda, which seeks to review the impact of digital tax stamps on revenue collection and manufacturing. 

The report, which is yet to be made public notes that before Covid-19, local excise duty had experienced an average growth of 12 percent between July 2016 and June 2019 but dipped to 7 percent in 2020 due to Covid-19, a year after implementation of digital tax stamps.

However, the growth rate recovered, rising to an average of 13 percent between July 2020 and June 2023. 

“Before the introduction of [digital tax stamps, local excise duty] collections experienced significant growth with 12 percent increases from July 2016 to June 2019. However …. in 2020, there was a 7 percent average decline [but] was followed by a 13 percent average increase  …  from July 2020 to June 2023,” the report reads, noting there has been a noticeable rise in excise duty collections from 2016 to 2023, partially due to mandatory registration of digital stamps. 

The digital tax stamps system is implemented on excisable goods, which include beer, spirits, soda, wine, mineral water, cement, sugar, cooking oil, fermented beverages and tobacco.  

Government agencies use them to conform to standards as well as ascertain the significance of products released into the market. 

In this regard, Uganda Revenue Authority (URA) has previously seized and destroyed 13,391 cartons of spirits that had been found not to conform to the digital tracking system.   The stamps, together with Electronic Fiscal Receipting and Invoicing Solution and digitised rental tax,  remain key in URA’s larger plan to increase compliance and on-boarding of new taxpayers. 

The report, however, indicates that whereas there has been a rise in collections, the stamps have increased the cost of operation for manufacturers.  

“These costs have posed financial challenges for manufacturers, particularly smaller enterprises with limited resources,” the report notes. 

It is important to note that manufacturers are only required to procure  stamps and internet to run the system.   

Under the Domestic Revenue Mobilisation Strategy, URA seeks to achieve a 20 percent tax to gross domestic ratio by 2025 as well as ease tax administration through digitising the entire tax register. 

In the last three years URA has reported an increase in compliance among excisable duty taxpayers and value added tax due to implementation of digital tracking tax solutions with the number of companies utilising the solutions rising from 600 last year to 1,060.