Business

Uganda Manufacturers Run to Museveni Over Controversial Digital Tax Stamp

Ugandan Manufactures have asked to meet with President Yoweri Museveni following the lack of compromise between them and Uganda Revenue Authority (URA) on the implementation of the Digital Tax Stamp (DTS).

URA is pushing to fully roll out the new tax solution which it hopes will be able to save up to Shs 4Trillion in revenues lost through illicit trade in alcohol, cigarettes and bottled water and soda.

Digital Tax Stamps are physical paper stamp which are applied to goods or their packaging but in this case contain security features and codes to prevent counterfeiting; tamperproof features; track and trace capabilities to enable consumers validate the stamp, traders and manufacturers track the product movement and government to monitor compliance of the product and stamp.

They also have a quick response code (QR code) that will allow distributors, retailers and consumers to use an app on their smart phones to verify the authenticity of the products; and a provision for online ordering and approval for delivery of stamps.

In October last year, URA contracted a Swiss company named Societe Industrielle et Commerciale de Produits Alimentaries (SICPA) to implement the DTS project starting with manufacturers of soft drinks and beer.

However, manufacturers have expressed a number of concerns with this new measure, which they say URA has declined to address.

First, they are opposed to the application of DTS at the cost of local manufacturers rather than URA itself.

This they say is tantamount to double taxation since they pay Excise Duty, Income and Corporation Tax, and Pay as You Earn (PAYE) Tax, among other levies.

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In the letter yesterday, Tuesday to President Museveni, the manufactures through their association UMA, said URA’s harried implementation of the project was likely to disrupt manufacturing and employment, but also lead to an increase in costs of production.

The manufactures therefore want government to gazette its commitment to pay for the costs association with DTS, rather than themselves.

They also want to URA to “cease to victimize manufacturers in order to pressure them to accept the costs.”

“Currently, most of our members… have been struck off the Withholding Tax Exemption list on these grounds,” said the manufacturers in the letter to the president which is signed by their association chairperson Barbra Mulwana.

“The purpose of this letter therefore is to seek for your urgent audience with the view of having the manufacturers concerns addressed urgently before Friday November 1st”

“UMA is deeply concerned that there seems to be no willingness by URA to address the above issues raised in spite of the tax contribution of this sector to government

Last year, Minister Matia Kasaija halted implementation of this project, saying that URA hadn’t fully explained to cabinet its cost implication.

It is estimated that, forcing for instance Uganda Breweries Ltd to have a stamp on each of its bottles at cost of Shs 50 as proposed by URA, will cost the company up to Shs 1.2Billion per month.

Without compromise with the manufacturers, however, URA proceeded with this implementation plans, announcing earlier last month that the project would go live as planned at the start of November.

 

 

 

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