Manufacturers Lose as court throws out Digital Tax Stamps case

The tax appeals tribunal has thrown out an application by manufacturers that was challenging the implementation of the Digital Tax Stamps solution.

The application filed by Nile Breweries and 17 other manufacturing companies sought to block the Uganda Revenue Authority from implementing a digital tax stamps solution.

On Friday, a three-man of the appeals tribunal including Dr. Asa Mugenyi, Dr.Stephen Akabway and Siraj Ali dismissed the application.

Dismissing the application, the tribunal found that the manufacturers would suffer no irreparable damage from the implementation of the DTS solution and that they didn’t prove what costs they would incur in its implementation.

“The major fear of the importers and manufacturers is that they may incur costs to install Digital Tracking Solutions on their premises. Incurring costs is not the same as suffering irreparable damage that cannot be compensated. The applicants have not given an estimate of the costs that will be incurred in installing the Digital Tracking Solutions in their premises,” the tribunal ruled.

In absence of an estimate, the tribunal ruled, the manufacturers and importers cannot claim that they will incur any losses.

The three-man tribunal also ruled that there is no evidence to prove the cost of installing the Digital Tracking Solutions will be so costly that they will suffer huge losses that cannot be compensated.

“Incurring costs involves spending money. Monetary expenses are easily compensated. In the event, government meets the cost of installing Digital Tracking Solutions. The applicants, therefore, will not suffer any irreparable damage,” the three-man tribunal ruled.

The tribunal, therefore, ruled that suspending a law that has not been declared unconstitutional is a very serious matter since the digital tax stamps are provided for by Section 19a of the Tax Procedure Code Act.

The ruling comes at a time when a set of manufacturers have been, for months now, resisting a move by the Uganda Revenue Authority to install machines at their factories that would help the tax body tell in real-time the production capacity to estimate tax revenue collection.

The solution, already used by Kenya and Tanzania, was gazetted to the public and started functioning today, November 1.

The legal defeat leaves no hurdle in the way for its implementation and opens the manufacturers up for more scrutiny by the tax body as it works towards an increased revenue collection basket to stem government borrowing.

Uganda Revenue Authority is working towards an increased revenue collection basket to stem government borrowing.

The ruling was welcomed by the URA commissioner general Doris Akol and Uganda Registration Services Bureau CEO, Twebaze Bemanya among other government officials.

Earlier, the manufacturers had met the Prime Minister, Ruhakana Rugunda who insisted to them that the solution would take effect today and they would have a three- month window within which to comply with the implementation process.

Digital tax stamps are to be applied on six products that include; wines, tobacco, beer, soda and bottled water among others.