The proposed rollout of the digital stamp by Uganda Revenue Authority-URA suffered a setback because of an injunction issued by the Commercial court blocking the entire exercise, local news agency, URN reports.
URA was expected to roll out the digital stamp by the end of April targeting high risk products like cigarettes, Beers, wines, spirits, sodas, and mineral water. The tax body informed journalists in April that it was starting with tobacco and follow with other products in subsequent months.
“We failed to start because they took us to court,” an official at URA told URN. Digital tax stamps are physical paper stamps, which are applied to goods or their packaging. They contain security features, codes and tamper-proof features to prevent counterfeiting.
The stamps are expected to have the track and trace capabilities to enable consumers validate them, traders and manufacturers track the product movement and government to monitor compliance of the product and stamp.
A 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 will be used.
Patrick Ocailap, the Deputy Secretary to the Treasury told a meeting in Kampala that digital stamps were one of the initiatives government was to use to boost revenue in the coming financial year.
URA has a target of Shillings 20trillion for the 2019/2020 financial year up from Shillings 16 trillion it is expected to collect this year. URA had said the initiative would generate Shillings 48bn in the coming financial year.
The injunction means URA will have to tussle manufacturers in court until their grievances including their worry that the initiative is costly for their businesses are resolved.
It also means that the implementation of the initiative will have to wait a little long and unlikely to start in the next financial year.
But URA is arguing the digital stamps are meant to help traders suffering from unfair competition that comes with contraband goods.
Clare Musiime Bakanga, the URA head of change digital tracking solutions, told reporters last month that URA was working with Uganda National Bureau of Standards (UNBS) to ensure they minimize revenue leakages, combat illicit trade and money laundering and trace the whereabouts of the product.
The battle against the URA digital stamps has been on since 2017 when the Authority mooted the idea. Uganda Alcohol Industry Association, an umbrella body of sellers and manufacturers of alcohol, wrote extensively urging URA to drop the idea.
Through their lawyers, TASLAF advocates and consultants, the association said: Government needs to explore options of a less burdensome solution to address illicit trade and fraud.”
It added: “Granted, there are potential anti-fraud benefits that will be realized but overall, the measure will have considerable impact on legitimate supply chains in terms of cost.”
Besides the court injunction secured by manufacturers against the project, URA insists they will continue engaging the legislators and manufacturers to come to a consensus.
This is after parliament on Thursday rejected a budget proposal of Shillings 103 billion to facilitate the project.
Jamil Senyonjo, an official in the URA Public and Corporate Affairs Office told URN that they would look to parliament on the matter with a view of approving the required project funds probably through a supplementary budget.
He revealed that incase the supplementary budget doesn’t come through URA will engage donors.
The Finance Ministry Spokesperson, Jim Mugunga said the digital stamps were envisaged to enhance the available tax collection means.
He says that they now have to make sure that there is compliance among tax payers to ensure that the required taxes are collected.
Asked whether a supplementary budget is to be looked at as an option to enable the digital stamps project start, Mugunga said parliament allows additional funding proposals but emphasized that in the absence of funds, the tax collection body is to step-up vigilance to limit tax evasion.
URN
