The Government of Uganda says that the ongoing implementation of digital tax stamps is one of the measures that are going to address the challenge of tax shortfalls which has been affecting Uganda Revenue Authority (URA) especially during this Covid-19 pandemic period.
In the recently concluded Financial Year, the government had planned to collect 20.6 trillion shillings domestically but only 17.5 was collected due to the effects of the Coronavirus that led to a lockdown which affected almost all businesses in the country.
URA registered a tax shortfall of 2.9 billion.
Hon Matia Kasaija, the Finance Minister said that the digital stamp system, if properly implemented, will eliminate the issue of shortfalls since all production activities will be monitored.
“We have not been performing at 100 percent, business people are not honest. There has been a lot of under declaration and we are getting evidence with the Digital Stamp solution. Things are changing,” Kasaija said.
Kasaija added that in the past, beverage manufacturers have been hiding twice of the total number of produced products declared, he gave an example that only one million bottles were being declared and the two million bottles were being hidden.
“I do not want to embarrass the business people, but hitherto, they were saying we are producing one million bottles of something for example, but when we put that digital tax stamp system, now the production has gone to three million. Where are the two million coming from?” Kasaija posed.
President Museveni, in one of his recent addresses, attributed tax shortfalls to leakage in terms of numbers and value, noting that there was a lot of tax evasion.
Uganda Revenue Authority recently said at least 84 companies producing wine, spirits, four beer manufacturers and 42 companies producing water that have not being paying tax had joined the digital tax stamp system to become tax compliant.
Highlighting the progress of the digital tax stamp system, URA said that before September 2019, only nine spirit companies were adhering to the system whereas there was none in the wines producing category.
URA also noted that they have been able to deal with the challenge of under declaration by manufactures through the digital tax stamp system.
“For example, a tax payer, instead of declaring 500ml would declare 300ml. This translated into monthly under declaration. With DTS implementation, URA has been able to know the right volumes coming off production lines,” URA said in the report highlighting the performance of the digital tax stamp system.
Government through Uganda Revenue Authority contracted SICPA, a Swiss company, to implement the Digital Tax Stamps system.
Digital stamps will address tax evasion, under declaration and smuggling which arise from cross border trade since goods will be traced through a distribution chain.