Government adds cement, sugar to list of goods to bear digital tax stamps

The Ugandan government has widened the pool of goods to be affixed with digital tax stamps after the inclusion of cement and sugar.

In a notice by tax body, Uganda Revenue Authority, the Ministry of Finance has in addition to beer, soda, spirits, wines, mineral water and tobacco products added cement and sugar as gazette products to be affixed with digital tax stamps.

“Effective April 1, 2021, all cement and sugar whether locally manufactured or imported into Uganda shall be affixed with Digital Tax Stamps. For purposes of implementing the above provisions, all premises for manufacture or packaging of the above-gazetted goods shall be registered for Excise Duty in accordance with the Excise Duty Act,” the notice by URA reads in part.

According to the tax body, manufacturers and importers of the above goods are required to have adequate space and tools to facilitate affixing and activating the digital tax stamps on these products at their registered premises.

“The transitional period of April,1, 2021 to May,31,  2021 has been granted during which every manufacturer, importer, distributor, agent or trader of sugar or cement shall be required to deplete all the unstamped goods.”

URA warns that any taxpayer who fails to affix a digital tax stamp on goods is liable to pay a penal tax equivalent to double the tax due on goods or shs50 million.

On Thursday,  the tax body engaged manufacturers of sugar and cement in preparation for the implementation of the digital tax stamps.

Present in the meeting were representatives from Bwendero D farm, Tororo Cement, Victoria Sugar Limited, Kakira Sugar, National Cement, UFCIL, Hoima Sugar Ltd, Busia Sugar, SCOUL and Atyak Sugar factory.

Each 50kg bag of cement will have a stamp bought at shs135 whereas cement bulkers will pay shs60,000 per truck while each bag of sugar will have a stamp worth shs39.

During the engagement, one of the manufacturers raised a question on who bears the cost of an expired stamp but the group was the stamp does not expire.

“The stamps do not have expiry dates. It is you who declare on the web portal the details of production, expiry and the Stock Keeping Unit of the product. You must put a serial number on each product. You can declare the stamp as unused by declaring it on the web portal as damaged. It is you who decide when to activate the system, whether upon packaging or when you dispatch your products for sale,” John Tinka Katungwensi the URA Assistant Commissioner of Large Taxpayers.

Digital tax stamps were gazetted by parliament in November 2019  and started taking effect on February 1, 2020.

Goods such as wines, spirits, water, cigarettes, beer , soda and now cement and sugar are required to have these stamps.

The stamps help in monitoring revenue declaration and improvement of product authenticity.

The solution is billed to save Uganda billions of shillings in taxes that were previously undeclared or under-declared.

According to URA, the digital stamp system is a tax administration solution built upon a scalable technology platform that integrates tools, devices and software.

“The system will enable the marking, tracking, tracing, inspection and verification of excisable products throughout their lifecycle, thereby allowing URA to monitor and control the production, import, export, and distribution of these goods in Uganda, “ said Ian Rumanyika, the URA manager for Public and Corporate Affairs.

“The DTSS will serve as an objective, verifiable source of data about production and importation volumes and inspection and public verification activities taking place in the market. This data will be used by URA to ensure and verify the full and fair taxation of all excisable products. By addressing illicit trade and under-declaration, the DTSS will support URA in closing the existing gap in excise tax collection.”