Government gazettes start of digital tax stamps

Uganda Revenue Authority (URA) has said implementation of Digital Tax Stamps will go on urging manufacturers to embrace the system that seeks to fight illicit trade and counterfeit.

The implementation of Digital Tax Stamps, according to details contained in the government gazette, will start on November 1 and manufacturers will have a grace period of three months within which they must install digital stamp equipment.

Speaking in an interview, Mr Vincent Seruma, the URA assistant commissioner for public and corporate affairs, said Uganda was not the first in the region to embrace Digital Tax Stamps, noting it has been implemented across the region including in Tanzania, Rwanda and Kenya.

“We would like to urge stakeholders and manufacturers to embrace the Digital Tax Stamps as they are a critical tool in improving accountability of production [as well as protecting] local manufacturers,” he said, adding that the system will be beneficial not only to the tax agency but to also manufacturers.
The gazette comes amid serious concerns with manufacturers urging government to come out clearly on who will bear the cost of installing digital tax equipment.

Raised concerns
Last Thursday, manufacturers, under Uganda Manufacturers Association, wrote to Trade Minister Amelia Kyambadde, seeking government’s commitment to cover the cost of implementing Digital Tax Stamps.
“…the affected members would wish to have unequivocal confirmation from government indicating that government shall pay for the costs associated with the implementation,” the letter reads in part.
The manufacturers also urged government to prevail over URA not to victimise Uganda.

Manufacturers Association (UMA) members opposed to Digital Tax Stamps, noting that the lack of cohesion was also resulting into unending tensions with URA.
UMA also addressed its discomfort with URA’s issuance of ultimatums, noting there was need to reach a properly harmonised position on a number of concerns.
However, Mr Seruma, last week told Daily Monitor that the cost of installing Digital Tax Stamps “will be born in principle by the manufacturers.”

The stamps will for the time cover six products, among them beer, soda, spirits, wines, water and tobacco products. The implementation date of November 1 has already been gazetted by the Ministry of Finance. URA, in a notice recently, noted that Digital Tax Stamps equipment shall be installed at premises of manufacturers, saying that those without automated production lines will be required to have adequate space and tools to facilitate inputting and activating Digital Tax Stamps.

URA also warned that manufacturers that will fail to abide by the law, will attract the higher alternative between a penal tax, equivalent to double the tax due on the goods or Shs50m.

Working elsewhere

Not alien: According to Mr Vincent Seruma, the URA assistant commissioner for public and corporate affairs, Digital Tax Stamps are not alien to Uganda. The system, he says has been implemented elsewhere in East Africa including in Tanzania, Rwanda and Kenya.

Key Issues

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.

However, UMA is not comfortable with URA’s issuance of ultimatums, noting there was need to reach a properly harmonised position on implementation of the system.

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