The government is banking on Digital Tax Stamps(DTS) to plug revenue leakages and increase tax collections, Ramathan Ggoobi, the Permanent Secretary at the Ministry of Finance and Economic Planning, has revealed.
At a conference on tax incentives, tax policies, and tax administration for Ugandan investors, Ggoobi said digitising the tax system through digital stamps will support the government's efforts to increase the tax-to-gross domestic product (GDP) ratio, thereby reducing borrowing.
The conference, held at Hotel Africana on September 4, 2024, was attended by Prime Minister Robinah Nabbanja, Minister of State for Privatization and Investment Evelyn Anite, and other stakeholders from the public and private sectors.
Ggoobi emphasized the importance of leveraging technology to modernize tax administration and enhance revenue collection.
“Government recognises the tax administration must evolve to keep pace with the changing economic environment, and this includes leveraging technology to streamline the tax processes, reducing the cost of compliance and enhancing transparency in tax collection, for example, the introduction of the e-tax, EFRIS and Digital Tax Stamps have significantly improved the efforts to modernize the tax administrations and also improve tax compliance,” Ggoobi said.
“Over the years, Uganda has made significant strides in strengthening the tax system, our revenue-to-GDP ratio has improved from a low of 8.8 per cent to 14.3 per cent this financial year. This upward trend is a testament to the reforms that government has implemented in the tax policy and administration aimed at broadening the tax base but also improving compliance and reducing tax evasion,” Ggoobi added.
Ggoobi said that the government is committed to addressing the remaining challenges facing investors and businesses, including easing compliance with tax regulations.
“The government is committed to addressing the remaining challenges facing investors and businesses, including easing compliance with tax regulations. The leadership is also committed to eliminating leakages and corruption that undermine tax morale,” he said.
Utility
In April 2019, the Uganda Revenue Authority (URA) launched the DTS initiative to combat illicit trade and seal revenue leakages.
Clare Musiime Bakanga, the URA Head of Change Management for Digital Tracking Solutions, said that many traders and businesses faced unfair competition due to the smuggling of goods.
She explained that URA is working with the Uganda National Bureau of Standards (UNBS) to minimize revenue leakages, combat illicit trade and money laundering, and ensure the traceability of products.
Digital Tax Stamps are physical paper stamps applied to goods or their packaging, containing security features and codes to prevent counterfeiting and tampering. These stamps also have track-and-trace capabilities, allowing consumers to validate the stamp, traders and manufacturers to track product movement, and the government to monitor product compliance.
A quick response (QR) code allows distributors, retailers, and consumers to use an app on their smartphones to verify the authenticity of the products.
When the stamps are placed on the products, they are registered both on the manufacturers’ server and URA’s digital server. According to Bakanga, this system enables URA to keep a record of how much was produced for the market and assess the applicable tax.