URA impounds Yaket mineral water over digital stamps

Tax body, Uganda Revenue Authority have invaded the premises of Chinese beverage company, Yaket International Limited, the manufacturers of Yaket Water and impounded goods worth shs1.9billion for not bearing digital stamps.

According to Vicent Seruma, the URA spokesperson, working on intelligence, they raided the company’s premises in Gayaza and found that they were not complying to the new tax system.

“The URA Domestic Taxes Enforcement Unit, working on solid intelligence moved in on Yaket International Limited, the manufacturers of Yaket Mineral Water and found the company producing and packaging unstamped water at their premises in Gayaza,”Sseruma said.

“The enforcement team also established that the factory was running two production lines churning out unstamped bottled water while two trucks were found on the road distributing unstamped water from the factory. Seven trucks were also found loading unstamped water for distribution to the market.”

According to the tax body, the company’s stock room also contained unstamped water whereas the company also failed to provide documents required to be maintained by a VAT registered taxpayer manufacturing excisable products and the Excise Registration Certificate.

During the raid, four people were arrested statements taken from a company representative whereas nine truck drivers were intercepted and the production and sale of Yaket mineral water was put on hold.

“The production area and the stock room with unstamped water were both sealed off. Search certificates were also obtained for the stock found in the two depots in Kireka also found selling unstamped water purchased from Yaket International Limited.   The goods impounded on the trucks and in the stores were worth over shs 1.9 billion with tax approximated at shs 569 Million,”Sseruma said.

He warned manufacturers against taking advantage of the current coronavirus lockdown to commit crimes but also urged traders to desist from stocking unstamped gazetted excisable products.

Digital Tax Stamps

URA commenced implementation of Digital Tax Stamps on November,1, 2019 to combat the production, importation and supply of counterfeit goods and to also boost domestic revenue.

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 the tax body, 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.

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.