URA warns dealers trading in illegal, unstamped cigarettes

Friday September 17 2021
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There is an increase in the sale of cigarettes that flout tax and health laws. Photo | File

By Dorothy Nakaweesi

Uganda Revenue Authority (URA) has warned retailers and dealers trading in unstamped cigarettes and other illegal tobacco products, saying they risk heavy penalties for trading in unauthorised goods. 

Speaking in an interview yesterday, Mr Ian Rumanyika, the URA acting commissioner public affairs and corporate communications, said the law prohibits sale of digital tax stamps gazetted products, noting that anyone who assists in their sale or circulation for onward consumption flouts the law and is reliable to a penalty or imprisonment or both once convicted. 

“All cigarettes and tobacco products must bare digital stamps. We shall penalise anyone found trading or assisting the trade of illegal cigarettes,” he said, noting that with effect from September 20, URA shall intensify enforcement operations across the country to ensure full compliance to the tax law, among which include digital tax stamps.

Mr Rumanyika was reacting to concerns of an increase in the sale of unstamped cigarettes and tobacco products that flout the law provided for under the Tobacco Control Act, 2015. 

In a notice early this month, URA warned manufacturers, distributors, retailers and agents that they risked paying a penal tax equivalent to double the tax due on the goods or Shs50m for distributing and dealing in digital stamps gazzeted good. 

URA also noted that such goods or persons dealing in them would be subjected to other enforcement measures including seizure, closure of business premises, distress proceedings or prosecution.

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The market has seen an increase in the sale of illegal cigarettes that not only offend the Tobacco Control Act, 2015 but occasion heavy losses to government in terms of taxable revenue. 

In a mini-survey, conducted by Daily Monitor early this week, it was found that unstamped and flavoured cigarettes and poorly packaged tobacco products that do not meet prescribed weight are openly sold in retail stores across Kampala, contravening the law and the tax code. 

For instance, it was found that a number imported cigarette products such as Oris from Germany flout almost all laws under the Tobacco Control Act and do not bare digital tax stamps. 

Yesterday, Mr Rumanyika said that whereas URA was not aware of how the products are ending up on the market, they would investigate the matter to understand their source and prosecute those dealing in such products. 

Under the Tobacco Control Regulations, 2019 it is illegal for anyone to deal in cigarette products whose unit package contains more or less than 20 sticks or tobacco products that weigh more or less than 20 grammes. 

The law also forbids any descriptive language such as ultralight, smooth, cool, natural and any other words that seek to blur a consumer’s attention from understanding the danger of cigarette smoking or tobacco consumption. 

The law also requires that tobacco products are packaged in a way that expressly warns consumers of the dangers associated to cigarette smoking and usage of tobacco products.

“A health warning shall not be capable of being distorted, damaged, concealed, obliterated, removed or rendered unreadable when the package on which it is printed is opened,” the Tobacco Control Regulations, 2019, notes in part.   

Uganda, according to the a 2017 report detailing the health cost of tobacco use in Uganda authored by Nigar Nargis, Kellen Nyamurungi, Sebastian Olakira Baine and Daniel Kadobera, loses Shs328.82b annually mortality and health care cost to ailments resulting from tobacco usage. 

Illicit trade    
Notwithstanding associated dangers, tobacco continues to be consumed both on the open and black market. In May, British American Tobacco Uganda (Batu), which is one of Uganda’s largest tobacco dealers, said smuggling and illicit trade in cigarettes was posing serious threats for both health and sustainable business. 

For instance, the company said, illicit cigarettes trade was getting to worrying levels, noting that a third party research had indicated an increase in illicit trade incidences, which during the period, had risen to 17.4 per cent by the end of December 2020. 

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