Uganda Revenue Authority has said it will invest in consumer sensitisation and education to help the public understand the Digital Tax Stamp system.
Speaking at a dialogue on digital tracking solution in Kampala on Tuesday, Mr James Odongo, the URA assistant commissioner for domestic taxes, said the Digital Tax Stamp, which was introduced in October last year and implemented on Nov 1, 2019 will not only help URA to improve its collection efficiency but also reduce the supply and entry of counterfeits.
“It is an administrative measure to help monitor counterfeits,” he said, noting the move was not in any way seeking to burden manufacturers.
Digital Tax Stamps are physical paper stamps with security features and codes. They are applied to goods or their packaging to enable manufacturers and traders to track a product’s movement. This will enable the government to easily monitor tax compliance.
This is in addition to quick response code (QR code) that will allow distributors, retailers, and consumers to use an app on their smartphones to verify the authenticity of the products.
The new stamps solution is part of URA’s scheme to combat illicit trade, close revenue leakages while managing compliance of some multinational companies that exploit gaps and in the tax collection architecture.
According to Uganda National Bureau of Standards, at least 58 per cent of goods on the Ugandan market are counterfeits, which presents risks to consumers and the economy.
However, during the same forum, activists against substandard goods and counterfeits under Anti-Counterfeit Network challenged URA to explain how the tax will stop the entry or manufacture of fake goods.
Mr Fred Muwema, the Anti-Counterfeit Network director legal and corporate affairs, said whereas they welcome Digital Tax Stamps, there was need for URA to explain what it seeks to achieve and how the tax will be implemented, benefits to consumers and how it will get rid of counterfeits.
“We are here to deepen our understanding of digital tracking solutions. We went to court challenging URA’s deadline to prosecute and arrest people without the tax. URA should explain to all of us what they want to achieve and how it will be implemented,” he said.
URA has previously said goods in the category of water, soda, beer, spirits and cigarettes, among others will be required to bear Digital Tax Stamps, failure of which distributors or manufacturers of such goods will be penalised.
The stamps are obtained through installing digital tax system equipment at such factories.
Digital Tax Stamps are still a controversial subject with consumers saying they are likely to increase the cost of business.