Uganda Revenue Authority (URA) has said it will invest in consumer sensitisation and education to help the public understand the Digital Tax Stamp system.
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.
At a recent dialogue held in Kampala, James Odongo, the URA assistant commissioner made a case for the new technology saying its benefits include curbing illicit products on the market as well as boosting domestic revenue (excise duty).
“Implementing the digital tax solution was meant to raise local excise duty as a tax levied on goods when they leave the factory or when entering the country,” he said.
So far the scope of the products that are gazetted to have the digital stamp range from tobacco products, beer, spirits, soda, wines, and water.
“We don’t know what we consume and what is there. And that is a problem. With the digital stamp technology, these products will have track and traceability capabilities right from the production line or importation,” Odongo said.
He explained that the manufacturers will be required to install the DTS equipment on their production lines, which will then transmit all information on volume of products as well as authenticity to URA.
According to Odongo, the objectives of the solution include boosting of the domestically mobilized revenue, protection of consumers from harmful products, enhancing fair competition and providing real time statistical data for tax policy and administration.
“It is an administrative measure to help monitor counterfeits,” he said, noting the move was not in any way seeking to burden manufacturers.
The consumer will be able to ascertain whether a particular product is genuine, by scanning the stamp thereon using a Mobile App or SMS. They will receive instant notification on information regarding the manufacturer and other details.
He also allayed fears among traders who think DTS is a tax.
“It is not a tax but rather a means of protecting the consumers and manufacturers at once. To ensure the consumers can be able to tell us that the product is genuine or not and the consumer will also be enabled to tell us where they have found a fake product and our enforcement team will come in,” Odongo said.
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.
URA has previously said goods which will not bear the digital tax stamp will attract a penalty on the part of distributors or 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 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.
During the dialogue, some of the manufacturers like Century Bottling which makes Rwenzori mineral water said all the water under production now has the digital stamp.
Simon Kaheru, who heads Communications at Century Bottling Uganda said however that the bottles (of Rwenzori) on the market that lack the stamps were produced months ago and that it was agreed with URA to allow the products to be phases out.
Fred Muwema, the director legal and corporate affairs for Anti-Counterfeit Network said that the stamps are a mark of assurance by the tax body to the consumers of the different products.
“I see two levels of liability her, the brand owner will be responsible as the primary manufacturer of the product, and the government that is certifying. The consumer in that case will be able to take action and claim damages,” Muwema said.
Uganda is 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.
According to URA, 32 manufacturers and importers have registered their factory lines in compliance with the digital tax stamps.
These include Crown Beverages, Mukwano Industries and Riham Industries, among others.
Speaking at the African Tax Administration Forum in November last year, President Museveni said the DTS will help reduce leakages.
“There was a big leakage in terms of numbers and value. In Uganda, there was a lot of tax evasion,” Museveni said.