Uganda Revenue Authority has said it will invest in consumer sensitization and education to help the public understand the Digital Tax Stamp system.
Speaking at a dialogue on digital tracking solution in Kampala on Tuesday, James Odongo, the URA assistant commissioner for domestic taxes, said 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.
“It is an administrative measure to help monitor counterfeits,” he said, noting the move was not in any way seeking to burden manufacturers.
“The DTS 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 the Uganda National Bureau of Standards, at least 58 percent of goods on the Ugandan market are counterfeits, which presents risks to consumers and the economy.
URA has previously said 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.
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.
Fred Muwema, the director of 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 here, 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.